SDCERA considers €40m commitment to EQT

The San Diego County Employees' Retirement Association is considering making a €40m commitment to EQT Partners’ sixth fund, which is targeting €4.25 billion.

EQT focuses on mid-market companies primarily in the Nordic countries and Germany. The fund will make control-oriented investments in businesses in Sweden, Germany, Norway and Denmark, with secondary activity in Central Europe, including Poland. Limited partners in the fund include the Teachers’ Retirement System of the State of Illinois and Investor AB, the Swedish parent of EQT.

SDCERA is being advised by private equity consultant Albourne. If the commitment is approved, it would represent a new manager relationship for the $8.1 billion pension, which has a 4.5 percent target allocation to buyout and growth capital investments.A spokesperson for the SDCERA was unavailable for comment at press time.

EQT typically makes equity investments between €75 million and €400 million. The firm has no sector focus, but has created six sector teams: consumer goods & retail, healthcare, technology, media and telecommunications; industrials, services and energy and environment.

EQT funds have invested over €8 billion in 55 companies, making 33 realised investments. As of 30 June, the firm has generated a gross internal rate of return of 58 percent and a gross multiple of invested capital of 4.2x, according to pension documents. EQT aims to generate an overall gross IRR of at least 25 percent and an overall gross multiple of invested capital of 2.5x.

Earlier this year, SDCERA committed to Oaktree Capital Mangement’s European Principal Fund III, which is targeting €2.5 billion to €3 billion for distressed debt investments in Europe, and Capital International’s sixth fund. SDCERA is an existing LP in Capital International Funds III and V.