Side Letter: EQT’s Asia breather; Eurazeo’s record year; Blackstone’s TacOpps $2bn

EQT is pausing plans to raise a large-cap Asia vehicle amid goal to raise another global mega-fund. Plus: Eurazeo reports a record year of fundraising and Blackstone surpasses $2 billion for its latest tactical opportunities fund. Here's today's brief, for our valued subscribers only.

They said it

“Our members are finding the global ESG standards market very confusing and don’t know what to rely on. We’re not hoping to add to the confusion, we’re hoping to develop something that will clarify.”

Martin Bresson, public affairs director at InvestEurope, tells affiliate title New Private Markets that it is developing an ESG reporting standards framework for its members (registration or subscription required).

Just happened

EQT takes a breather
Private equity’s preoccupation with raising mega-funds could be coming at the expense of other strategies. On EQT‘s Wednesday earnings call, chief operating officer Caspar Callerström noted that, although the firm continued to strengthen its position in Asia-Pacific, it would prioritise other near-term fundraises over a large-cap, pan-Asia vehicle. EQT, which historically has invested in the region via a mid-market fund series, announced plans last year to raise a bigger Asia fund that could contribute about €2 billion to its AUM. “Given that it’s a super busy fundraising year, we’ve said that we will have to put that decision a bit on hold and raise the other products,” Callerström told Private Equity International after the earnings call.

Asia-Pacific fundraising has been a bit of a mixed bag in recent years. Though smaller country funds, particularly those targeting China, have struggled to raise capital, larger, pan-regional vehicles – such as those managed by KKR and Baring Private Equity Asia – have made hay. Asked whether China’s regulatory crackdown was a factor in its decision not to raise a large Asia fund in the near-term, Callerström told PEI the firm’s increased focus on staffing up in Japan and South Korea meant China would, over time, account for a smaller share of total deals in the region.

“We continue to invest in our APAC platform, because we are going to be there,” he said. “Exactly what shape or form, we do not know exactly.”

Eurazeo-d how much?
To the surprise of very few, French asset manager Eurazeo had its best fundraising year in 2021, according to a Wednesday statement. The firm reported €5.2 billion of inflows, an 80 percent rise from the prior year, International LPs made up approximately two-thirds of its LP base, up from just a quarter in 2020, while high-net-worth inflows doubled to €550 million. PE made up €3.1 billion or roughly 60 percent of commitments, a modest increase from €2.4 billion the prior year. Eurazeo raised €1.6 billion against a €1 billion target for Eurazeo Growth Fund III in July.

They did the math

Aiming Hg
To say it’s a good time for tech might be an understatement. Many such companies have spent the past two years riding high on pandemic-related tailwinds at a time when PE fundraising has hit an all-time record. Enter: Hg. The London-headquartered software and services firm is seeking more than $14 billion across its 10th mid-cap Genesis fund and third large-cap Saturn fund, according to documents prepared for the State of Connecticut Treasurer’s office, which shed light on the performance of some of Hg’s prior funds. You can find more details here, and an excerpt below.

Essentials

Talking tactics
Blackstone has secured an initial $2 billion-plus for its fourth fund geared to tactical opportunities, affiliate title Buyouts reported on Tuesday (registration or subscription required). The amount is just under half of the fund’s $4.5 billion target. Tac Opps, launched in 2011 and today a core Blackstone platform with $34 billion of managed assets under its belt, inaugurated an entirely new niche category, broadly known as special opportunities.

In its Q3 2021 earnings report, Blackstone said the strategy was generating a combined multiple of 1.6x as of September. The combined net IRR on realised investments was 19 percent, and the total net IRR, 14 percent.

Presently, a dozen or so large PE firms offer the strategy or one that resembles it, including Apollo Global ManagementAres ManagementBrookfield Asset ManagementSixth Street and TowerBrook Capital Partners. Special opportunities funds now in the market are targeting more than $20 billion, including Ares’ second vehicle, which last fall collected an initial $3.3 billion against a $4 billion target.

Have Summa that
Nordic impact firm Summa Equity has collected SKr23 billion ($2.5 billion; €2.3 billion) for its latest fund, per a Thursday statement. Fund III is more than triple the size of its 2018-vintage predecessor and was raised within four months via a fully virtual process. It will target more geographies outside of the Nordics, with the firm having launched offices in Munich amid plans to invest more globally, affiliate title New Private Markets reported last year (registration or subscription required).


Today’s letter was prepared by Alex Lynn with Carmela Mendoza and Michael Baruch.