EQT, the Swedish buyout firm that has recently started spending its fifth fund, has secured majority control of its management company, after buying out more than half the stake previously owned by Investor, the investment vehicle of Swedish industrialists, the Wallenberg family.
EQT’s partners have paid SEK 290 million (€ 31.2 million) to acquire the 36 percent stake from Investor, the Wallenberg’s investment vehicle. EQT now owns 69 percent of the management company, while Investor, which is also the biggest backer of EQT’s funds, retains a 31 percent stake.
Last year the management company, which employs more than 120 people, had a turnover of SEK 348 million, with reported post-tax earnings after tax of SEK 33 million. Following the close of EQT’s €4.25 billion fifth fund, it now manages more than €10.5 billion of capital.
The deal values the company at SEK 806 million.
Conni Jonsson, managing partner of EQT, said the deal “strengthens our platform for long-term growth and development”. It would also establish the firm’s independence, he added.
Investor has backed EQT since its inception and has been the largest investor in all five of EQT’s funds, though its stake has decreased as the funds have got bigger. It committed 12 percent of the total capital in EQT V, compared to 32 percent of the capital in EQT III.
It is the latest indication of increased appetite for access to the management companies that control private equity funds. This month, a partial float of the management company behind US firm Fortress Investments saw its market capitalisation double on the very first day of trading.
EQT is following the example of UK firm Permira, who also bought out original backer Schroders, the asset management group, in order to give it greater independence and more control of its own destiny.