EQT conducts strategic review of credit business

EQT is undertaking a strategic review of its private credit business, the firm revealed in its fourth quarter earnings call on Thursday.

“We need to focus our resources, whether it’s management time or capital,” said EQT’s chief operating officer Casper Callerstrom on the call. “We can’t do everything.”

The firm wants to focus its resources and reduce complexity in its business, Callerstrom said: “If we keep adding products that are different both from an operational perspective as well as from an investing perspective, that adds the complexity to our business.”

On the timing of the review, Callerstrom explained the firm had come to a position in which it had to make “tough decisions” on the credit side in terms of strategy and in terms of growth perspective. “This puts us in a position where we really need to make up our mind what we really want to do – that’s what triggered this review,” he added.

A spokeswoman for the firm told PEI the strategic review options for its credit business should be ready by the summer.

The firm appointed JPMorgan as financial advisor for the review. It is unclear how long the strategic review will take. EQT chief financial officer Kim Henriksson said it was “business as usual” in credit during the review period.

Private credit accounted for roughly 10 percent of the firm’s AUM or €3.9 billion and contributed 6 percent of fees as of end-December, according to this latest earnings report. Its private credit team employs around 40 people.

For the near-term EQT plans to continue scaling its other “strategic priorities”, such as venture, growth, public value and the Asia-Pacific region. It is also on track to open offices in Paris and Sydney in the first quarter of the year.

2019 was a record year of investments for the firm, with €11.9 billion of deals secured. Meanwhile, total gross fund exits in the fourth quarter amounted to €2.4 billion and were mainly within the firm’s private capital business. Other highlights last year included the final close of EQT Ventures II on approximately €620 million, as well as fundraising efforts for EQT Real Estate II, which is seeking €750 million and preparations for EQT IX, which is targeting €14.75 billion.

EQT hired 105 new employees last year and will continue to scale and digitalise its business into 2020. Its assets under management grew 9 percent to €39.9 billion in 2019, compared with €36.6 billion in 2018.