EQT has closed its EQT IV fund, which it launched in January 2004, on €2.5 billion ($3 billion). The fund was capped at that level, having had an original target of €2 billion.
The fundraising was advised by placement agent MVision Private Equity Advisers and law firm Clifford Chance.
Investor AB, the investment vehicle of the Wallenberg family that founded EQT in 1994, committed €500 million to the fund. Nordic investors accounted for 40 percent of the total (€1 billion) and non-Nordic investors 60 percent (€1.5 billion).
Of the proportion committed by investors outside the Nordic region, 25 percent came from the UK and continental Europe, 25 percent from North America, and ten percent from the rest of the world.
By type of investor, the fund as a whole received commitments from pension funds (35 percent), insurance and other financial institutions (30 percent), endowments, foundations and families (20 percent) and funds of funds (15 percent).
“We were very pleased at how quickly we were able to raise the fund, which exceeded our expectations,” said the firm’s Helsinki-based senior partner Andreas Tallberg. “We had a very satisfactory conversion rate, which stemmed from being focused on a narrow group of high quality would-be investors.”
Sources close to the fundraising said it attracted around 85 institutional investors out of 100 in total. Tallberg declined to specify the minimum commitment demanded, but hinted there was flexibility for family groups. “Families have an importance to us that goes beyond the amount they can commit, and €10 million to €20 million might be too much for them,” he said.
Asked what attracted investors, Tallberg said: “At the end of the day, people want consistency and we were able to offer a good, solid track record. They don’t want turnover of management teams at the GP level and they don’t like style drift.”
He added that the firm was differentiated from rivals by its 70-strong network of senior industrialists, who commit funds and expertise to EQT portfolio companies and typically assume the role of chairman or vice chairman. Private equity firms are increasingly seeking to add value through operational expertise rather than financial engineering skills.
Tallberg said EQT was helped by exits from two businesses during the fundraising process: Finnish baker Vaasan & Vaasan, which was sold to UK private equity firm CapVest in January, and Swedish heating wholesaler Dahl, which it sold to Saint-Gobain of France in March. The consideration was not disclosed in either case, but Tallberg said both delivered a return of four times capital invested.
Nordic private equity firms have had some mixed fortunes on the fundraising front in recent times. In June 2003, start-up fund Altor Equity Partners closed its debut fund on €650 million just four months after launch. But Industri Kapital, which is seeking to raise €2.5 billion, announced a first closing of just €500 million in October 2003.
EQT says EQT IV will continue the same strategy adopted by prior funds, making controlling equity and equity-related investments in medium to large sized companies based in Northern Europe. The firm has existing commitments exceeding €5 billion from investments in more than 30 companies.