EQT to hit final close on Fund IX by October

The firm’s ninth flagship fund, which was launched before the pandemic, has a €15bn hard-cap.

EQT expects to hold a final close on its ninth flagship fund before the end of the third quarter.

EQT IX has a €14.75 billion target and €15 billion hard-cap and was launched in January this year.

The fund is “anticipated to be materially concluded during the third quarter”, according to a Q2 2020 summary statement from the firm. Chief executive Christian Sinding had said during the firm’s first quarter earnings call in April that fundraising for the vehicle will take longer due to the market environment.

If successful in reaching its hard-cap, Fund IX will be nearly 40 percent larger than its 2018-vintage predecessor.

Sinding declined to comment on the investor base for EQT IX on the firm’s Q2 2020 summary call on Thursday.

Teachers’ Retirement System of the State of Illinois, Cathay Life Insurance, Chicago Teachers’ Pension Fund and Fubon Life Insurance have committed to the fund, according to PEI data.

Asked about the overall fundraising environment amid covid-19, Sinding said on the call that private equity will continue to attract investor demand due to its outperformance. New sources of capital are coming from multiple areas, he added, including from LPs that are underallocated to the asset class, as well as private wealth and retail investors.

Although tapping capital from retail investors such as defined contribution plans is still “early days” for the firm, Sinding said EQT has a strategic team working on this channel. He noted it is too early to comment on when capital raising from the retail investor market will have a material impact on EQT.

“As all of our larger peers, we are working on this to make sure we understand it and figure out exactly which products within EQT will fit this type of investor over the longer term. We have a specific initiative working on this right now.”

EQT made its first investment from Fund IX early this month with the acquisition of enterprise software provider IFS, which it previously owned through its 2015-vintage Fund VII.

With the acquisition of IFS by EQT VIII and EQT IX, EQT VIII is expected to be between 80-85 percent invested and the commitment period for the vehicle has been terminated, according to a statement.

Total investments by the EQT funds in the quarter amounted to €1.3 billion. Investments via the firm’s PE funds include German hand sanitiser business Schülke (EQT VIII) and Spanish visual content company Freepik (EQT Mid Market Europe), and an add-on acquisition with Silicon Valley-based Rancher Labs.

Sinding noted the firm is also focused on its growth strategy and Asia-Pacific strategy and expects to launch funds around these sometime next year.

Exits remain tough, with bid-ask spreads between sellers increasing and financing becoming more complicated for some sectors, Sinding said. Total gross fund exits in the quarter amounted to €300 million, of which the vast majority was within its credit business. The firm sold its private debt business to Bridgepoint in June.

The firm’s AUM of €40.1 billion as of end-June remains largely unchanged from the previous two quarters.