EQT seals first deal from €6.75bn Fund VII

The fund has acquired 75% of TOP-TOY in a deal valuing the Nordic toy retailer at DKK 2.3bn.

Northern Europe-focused EQT has made its first investment from its seventh buyout fund, acquiring 75 percent of toy retailer TOP-TOY in a deal valuing the business at DKK 2.3 billion ($343 million; €312 million).

EQT is acquiring the stake from the company’s founders, the Gjørup family, who will remain a shareholder in the business. Founded in 1963, TOP-TOY operates toy chain BR across the Nordics and Northern Germany and TOYS“R”US across the Nordics. The company operates more than 300 stores, employing around 4,000 people.

According to a joint statement from EQT and TOP-TOY, the business recently launched a “new and ambitious strategy with the aim of becoming the undisputed No. 1 retailer in the Nordics selling products that make children happy”, offering customers “great shopping experiences” both in stores and online.

TOP-TOY reported retail revenue of DKK 3.4 billion and an EBITDA of DKK 255 million for the financial year ending 30 June 2015.

In the statement, Morten Hummelmose, a partner at EQT Partners, said the firm has followed TOP-TOY for “several years”.

“We believe the company is well equipped for further growth and see significant opportunities in current markets, both online and in physical stores,” he said.

EQT held a first and final close on EQT VII in August on its €6.75 billion hard cap after just six months in market. The firm officially started fundraising toward the end of January, initially seeking €5.25 billion, and investor interest in the fund was understood to be around €11 billion, Private Equity International reported previously.

Instead of the standard five-year deployment period, EQT has six years to invest the fund.

“We think it’s useful to have a bit of a longer timeframe due to current macro-economic uncertainties. Having capital committed for a little bit longer is an advantage,” Christian Sinding, EQT partner and head of equity, told PEI earlier this year.

Investors in the fund include AP3, AP6, APG, Ardian, Argentum, CNP Assurances, Danica, GIC, HarbourVest Partners, KEVA, KIRKBI Invest A/S, Ilmarinen, The Andrew W. Mellon Foundation, New Mexico State Investment Council, New York City Retirement Systems, Partners Group, PFA, Sampension, Signal Iduna, USS and Varma, PGGM and the Teacher Retirement System of Texas.

EQT VII is the first buyout fund raised by the firm after Thomas von Koch, who has been with the firm since inception, succeeded Conni Jonsson as a managing partner in March 2014.

It is understood that the average gross money multiple on sold deals from EQT’s buyout activities over the last 20 years is around 2.8x.

The TOP-TOY transaction is expected to close in January 2016. The Gjørup family were advised by FIH Partners and Plesner, and EQT VII was advised by SEB Corporate Finance and Accura.