EQT has successfully added another strategy to its platform with the final close of its debut venture fund on €566 million.
The firm has been building a bench of technology and venture specialists for some time, with a view to not only raising a venture capital fund but to also work with EQT's existing assets in mid-market and buyout portfolios.
The venture fund is “stage agnostic”, investing in fast growing European businesses at any point in their development. It won't make early stage investments in US businesses – thereby avoiding competing head on with the large US VC firms – but will seek to position itself as a partner to US-based businesses looking to expand into Europe. It has made five investments so far, all into European growth companies.
In what has been a benign fundraising environment for private equity firms, Stockholm-headquartered EQT has been among the most successful at raising capital. Alongside the venture fund, the firm has recently closed a mid-market credit fund on €530 million and in August last year closed its seventh buyout fund on €6.75 billion after marketing it to investors for just six months. This year the firm made it into the 10 largest private equity firms in the world based on funds raised, according to the PEI 300 .
The newly closed venture fund will pay carry on a whole-of-fund basis with a hurdle rate of 8 percent. It will be run by three technology industry veterans Hjalmar Winbladh, Kees Koolen and Lars Jörnow.
Limited partners invested in the fund are mostly existing investors in EQT's other funds, Thomas von Koch, managing partner and CEO of EQT told PEI . Approximately 75 percent of the LPs are existing investors, he said, alongside some new family offices, which “are more comfortable with venture”, and a number of individual entrepreneurs. Individuals from EQT account for 10 percent of the committed capital.
Institutional investors in the fund include HarbourVest Partners, Ilmarinen, Finnish Industry Investment, the European Investment Fund (EIF), The Fourth Swedish National Pension Fund (AP4), Vaekstfonden and Sweden's SEB Pension och Försäkring AB, according to a statement from the firm.
As well as the individuals hired to run EQT's venture fund, the firm has hired a four technology experts to operate to bring to bear some positive disruption to the firm's own operations, as well as those of its more mature portfolio companies. These comprise a 'head of digitization', Olof Hernell from Google; a chief information officer, Petter Weiderholm from Spotify; head of engineering Daniel Wroblewski from King Digital; and head of marketing technology Sven Törnkvist, formerly of Ericsson and Google.
“They will sit with the VC team but will act as a bridge to the rest of the firm,” said von Koch.