EQT inches closer to €14.75bn target for Fund IX

The firm gathered €14.6bn by year-end for its ninth flagship and expects to hold the first close on its debut growth vehicle this year.

EQT, the second-biggest private equity firm in Europe according to the PEI 300, had raised €14.6 billion by the end of last year for its ninth flagship fund.

The firm gathered more than €23 billion across strategies during 2020, the most it has raised in a single year since inception. The record fundraise was also more than double the capital raised in 2019, amid market uncertainty caused by the coronavirus pandemic.

EQT IX has a hard-cap of €15 billion and a target of €14.75 billion. Capital raising for the vehicle, “progressed according to plan albeit with an increasing share of work handled remotely and digitally”, according to its 2020 year-end report published on Tuesday. The firm has deployed about one-third of EQT IX’s fundraising target.

Fundraising for its buyout flagship EQT IX was “materially concluded” as of the end of September with €13 billion raised, chief executive Christian Sinding said on the firm’s third quarter earnings call last year. He had said in July that fundraising for EQT IX was expected to be concluded in the third quarter.

Along with EQT IX, the firm raised €7.6 billion out of a €12.5 billion target for EQT Infrastructure V and reached its €1 billion hard-cap for Real Estate II at year-end, according to the report.

Speaking on the firm’s annual results call on Tuesday, Sinding said “preparations are on track” for fundraising for its debut growth vehicle, which is seeking more than €1.6 billion. The firm expects a first close on the vehicle within the calendar year, he added. EQT Growth, which launched in October, made its first investment this month in Finnish food delivery platform Wolt, as part of the company’s $530 million capital raise. Growth sits between its venture capital and private equity businesses and will invest between €50 million and €200 million per deal.

EQT this month acquired Philadelphia-based real estate group Exeter as part of its plans to increase its presence in North America. The deal brings 60 new fund investors to EQT and adds $10.2 billion to its year-end AUM of €52.5 billion. The combined real estate platform called EQT Exeter will be run independently but will be able to use EQT’s operating platform. The acquisition will also result in cross-sales of real estate products between EQT and Exeter, Sinding noted.

New investments during the year reached almost €13 billion, a 32 percent increase on 2019. Nearly 85 percent or €11 billion of that was executed in the second half of the year as market conditions improved and activity picked up, EQT noted in the report. Of the total investments made during the period, 61 percent was invested in private capital – venture, growth and private equity – and 39 percent in real assets.

Sinding warned that the deployment pace going forward may not be as the same level as H2.

“Competition is tough. We see plenty of capital looking to invest in companies which have been resilient and growing during the pandemic… and we see high valuations as a result. Thus, the bar for new investments is quite high,” he said.

Exit activity was subdued during the year with €3.4 billion of exits – a decrease of 53 percent compared with 2019 – of which €3.2 billion took place in the second half.

Adjusted total revenue increased by 34 percent to €762 million in 2020, from €570 million the year before.

The firm reported €52.5 billion of assets as of the end of December, €16.5 billion more than the equivalent period in 2019, mainly driven by fundraising of EQT IX and Infrastructure V. Private capital represented €33.1 billion, and real assets €19.3 billion.