Private Equity News & Analysis

EQT’s latest fundraising surprises investors

Two years after closing EQT IV, EQT Partners is back in the market raising a new buyout fund, which investors say may be too much too soon.

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EQT Partners, the Nordic buyout group run by Conni Jonsson, has surprised the market with an early return to fundraising before any exits from its most recent fund.
 

Even if you are a fan of EQT, there is a good chance you will struggle to find an allocation for them given how recently they were in the market.

Pension fund investor

The firm is marketing a €3 billion fund just two years after closing its €2.5 billion fund EQT IV. It is aiming for a first close of the new fund at the end of August, according to marketing literature, and a final close by the end of the year, according to one fund of funds manager.

One pension fund investor, who met EQT on its road show recently, said: “Even if you are a fan of EQT, there is a good chance you will struggle to find an allocation for them given how recently they were in the market.” However another investor said this was more a structural issue for funds of funds and generally investors were used to funds coming back to market quicker.

The pension fund manager said some investors were also concerned the current fund was too highly concentrated in too few large deals. “EQT IV has made just seven deals and three of the deals account for half of the fund,” he said.

The firm has made some large investments with EQT IV in deals such as the €3.3 billion take-private of Gambro, a Swedish healthcare company, the €1.6 billion acquisition of MTU Friedrichshafen, the heavy engines group, and ISS, the cleaning company it bought with Goldman Sachs for €3.1 billion. The fund is yet to complete a full exit, although BTX Group, a Danish clothing wholesaler, is close to being recapitalised, according to an investor in Fund IV.   
 

Jonsson: out on fundraising trail

However, another investor said EQT’s investment thesis had always been to target both mid-market deals and large deals and at different points in the industrial cycle its funds would be weighted more towards large deals.

He said the firm’s industrial approach to buyouts, inspired by cornerstone investor the Wallenberg family, the Swedish industrial dynasty, meant EQT could do more with the opportunities it sourced. He said: “The firm doesn’t do club deals and its style of industrial ownership means it can step up to the next level as need be.”

EQT and its placement agent MVision declined to comment.