Three things to know about EQT’s growth strategy

EQT Growth will invest between €50m and €200m in mostly European companies focused on B2B tech, healthcare tech and impact tech.

EQT has made its foray into growth equity investing this year, joining peers Blackstone and Permira.

This week the Northern European firm named Microsoft dealmaker Marc Brown as head of EQT Growth. Brown has 20 years of experience in building out the tech company’s corporate development unit which has made over 185 acquisitions. Also in the growth team are partners Carolina Brochado, former partner at Atomico and SoftBank Investment Advisers, as well as EQT veterans Victor Englesson, Dominik Stein, Johan Svanström and Henrik Landgren.

Here’s what we know about EQT Growth:

It will invest from EQT’s balance sheet… for now

EQT Growth will make its first few investments from the balance sheet. The firm is set to launch a dedicated vehicle for the strategy next year, chief executive Christian Sinding said on the firm’s half-year results call in August. It is unclear how much the firm is targeting for the fund and EQT declined to comment on this.

Ticket sizes are between €50 million and €200 million and capital will be invested across venture growth in minority interests as well as control deals, Svanström told Private Equity International.

Key investment areas include B2B tech, healthcare tech, impact tech and consumer tech, according to a statement.

The firm has made its first investment from the strategy, in plant-based company LIVEKINDLY, Sinding said on the firm’s Q3 earnings call on Wednesday. The growth team has been busy reviewing deals and building up the team. There is no lack of opportunity and the team has plenty to do, Svanström noted. “We’re here with live ammunition in the market.”

It aims to capture the ‘golden era’ of Europe tech

The EQT Growth strategy will bridge the growth funding gap in Europe and will have a large focus on the region. “EQT has the aspiration of supporting what we think is the golden era for European tech over the next five to 10 years – we just need to make sure we grab the opportunity,” Svanström said.

Growth capital – the market segment between venture and private equity – in Europe is still mainly provided by US growth funds, according to Svanström. Using its “locals-with-locals” strategy, the firm will back companies “from the founding team stage all the way to being a global operating company and going for an initial public offering or a big trade sale”, he added. The unit might also invest selectively outside of Europe, it is understood.

Brown will be based in London and the partnership team based in Europe – the timing of which is unclear.

Motherbrain will feed and drive investments

Motherbrain, EQT’s artificial intelligence unit, will be a “strong component of the growth strategy”, according to Svanström. It has identified a number of companies to invest in, which weren’t immediately on the growth team’s radar, he added.

Similar to what the firm’s venture team has done, the growth team’s investment process will be informed by data intelligence in identifying trends and potential investment targets.

“Every single conversation that we have about a company or even academic research goes into the algorithm; it helps us score opportunities and it learns 24/7, really adding to our human capabilities,” Svanström said.

The story has been updated to reflect that EQT Growth has made its first investment in LIVEKINDLY.