Exclusive: EQT aims for €5.25bn with Fund VII launch

The firm, which came to market by the end of January, aims to hold a first close this summer

EQT, a Northern Europe focused firm, has officially started to market their latest buyout fund, PEI has learnt.

The firm, which officially started fundraising towards the end of January, is looking to collect €5.25 billion for EQT VII, according to sources familiar with the matter. The firm is expecting to hold a first close during summer.

EQT declined to comment on fundraising.

The fund will be slightly larger than EQT VI, a 2011-vintage which closed on its €4.75 billion hard-cap, having initially targeted €4.25 billion.
EQT’s Fund VII will have a similar strategy to the previous vehicle and will target the Nordic region and German-speaking Europe. The investment size will typically range between €100 million and €600 million.

EQT VII will be the first buyout fund raised by EQT after Thomas von Koch, who has been with the firm since inception, succeeded Conni Jonsson as a managing partner in March 2014. The firm has raised 17 funds totaling approximately €22 billion since inception in 1994. The average gross money multiple on sold deals from EQT’s buyout activities over the last 20 years is 3x, EQT told PEI last year.

The fund offering comes at a time when many GPs have expressed concerns about high valuations. In an interview with PEI last October, Von Koch warned about growing ‘euphoria’ in the debt markets, which he described as ‘scary’.

“It will end up in tears. In 2006 and 2007, before Lehman Brothers fell, firms were looking at high underlying growth of the companies, so there was a rationale around it. Today, to apply that kind of debt while the underlying growth is very small is very gutsy,” he said at the time.

High gearing ratios have pushed up acquisition multiples and as a result, investing is a lot more challenging – if you don’t want to pay too much at the entry level, Von Koch added. But he admitted EQT had no choice but to carry on investing. “We cannot go to our investors and say: we won’t be doing anything for two years because everything is too expensive. Investors are not happy to pay fees on the capital they allocate to our fund and then for us to do nothing.”

Last year, EQT used its EQT Fund VI to acquire Bureau Van Dijk, a Belgian provider of business intelligence, which was formerly owned by Charterhouse. It also invested in Evidensia, a Scandinavian veterinarian services provider, Sportradar, a provider of live sports information and services, Qinterra, an oil & gas industry service provider, and Færch Plast, one of Scandinavia’s largest producers of thermoformed plastic trays for different foods, including fresh meat, cold foods & snacks.