Private Equity News & Analysis

Off offshore

In June, EQT said it was bringing its various funds onshore under a new holding company. But what’s the benefit? And could it be the first step towards a listing?

By
PEI Staff
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In June, EQT said it was bringing its various funds onshore under a new holding company. But what’s the benefit? And could it be the first step towards a listing?

As far as EQT managing partner Conni Jonsson is concerned, the private equity sector needs to become more of a ‘normal industry’. In a recent call with journalists, he said EQT will bring all its various funds onshore under a new holding company called EQT Holdings.
 
According to EQT Holdings’ chief operating officer Johan Bygge, it’s more practical to move the administration onshore, closer to the business teams. But this is just as much about reputational issues. “It’s a reality that being based in tax havens doesn’t [go] down well with all of our investors, such as pension funds and sovereign wealth funds. Investors were not pushing for this, but they have been commenting on us being offshore.”

The benefits of moving onshore are clear, he says. “It will be good for the brand. It will be good for when we do fundraising; it shows we respond to demands from the investors.” And with a number of different regulatory changes on the agenda, “it’s probably easier for us to be inside the European Union”.
 
“EQT in particular are well known and really need to please the media,” says one legal source in the Nordics. “[Plus it] still has significant interests in healthcare and other publicaly funded businesses [which increases the level of scrutiny].”

But while the firm will pay a little more tax – which EQT insists won’t burden investors – the move won’t make much practical difference, the source adds. “It’s more a case of experience; investors are more used to working with [jurisdictions] like Guernsey or Jersey, Luxembourg, or other places.”

“They feel that Sweden is scary in a way – but if you really look into it, there aren’t that many differences, actually,” agrees the legal source. 

Bygge says he “wouldn’t be surprised if other firms are looking into the same kind of move”. And as popular opposition to tax havens (and tax avoidance) mounts, this may be a relatively inexpensive and painless way for firms to improve their image. Especially if they’re thinking about going public at some stage, say. Watch this space.