Swedish investment firm EQT Group’s private wealth strategy, which was launched in May, will start off with around 700 million euros ($786 million) underlying fund commitments.
The firm’s first semi-liquid fund, EQT Nexus, offers retail investors in Europe and APAC access to a range of EQT’s strategies, such as EQT X or EQT Infrastructure VI, Gustav Segerberg, EQT’s head of business development, said during its H1 2023 earnings call on Friday.
Co-investment opportunities will also be included in the fund, the firm said in its half-year report.
“EQT expects a one-off increase in FAUM (fee-earning AUM) for EQT AB of approximately 700 million euros within the coming 12 months as non-fee-generating commitments become fee-generating,” the report said.
EQT Nexus is set with a net asset value of 350 million euros, the firm added.
Going forward, the Stockholm-based firm will expand the targets and structure of the private wealth strategy, as well as add more distribution partners in different regions, said Christian Sinding, CEO and Managing Partner of EQT, without disclosing which distribution partners the firm has worked with.
EQT will also look at launching asset-specific strategies tailored for individuals seeking some sector exposure.
EQT said it saw vast opportunities in private wealth, as the retail segment accounted for only 2% of the $135-trillion private market allocation.
“The private wealth segment’s allocations to private markets are expected to grow by 12% annually over the next decade,” Sinding said.
EQT currently has about 50 investment professionals in its private wealth team, and will even further build out these capabilities in the coming 12 to 18 months, said Segerberg.
Fund performance
EQT deployed 11 billion euros in total in H1 2023, compared to 5 billion euros in the same period of 2022. New investments in Asia Pacific include SK Shieldus in South Korea by EQT Infrastructure VI and IMG Academy and HDFC Credila by BPEA VIII.
Meanwhile, the firm made exits worth 4 billion euros, which was about the same as H1 2022. Signed exits during the first half of this year include fund administrator and corporate service provider Vistra (through BPEA V and BPEA VI) following its merger with Tricor (BPEA VIII), and BBS Automation (which was held by EQT Mid Market Europe and EQT Mid Market Asia III).
In terms of fundraising, its fee-earning AUM in H1 2023 increased to 126 billion euros, up about 64% year-on-year. Its total AUM in the period was 224 billion euros.
EQT acquired Hong Kong-based private equity BPEA last year. BPEA EQT funds, excluding the first five vehicles by the Asian manager, delivered gross multiple on invested capital of 2.5x and net IRR of 20% since inception as of Q1 2023.
In terms of distributions, BPEA EQT along with EQT’s Europe and North America PE, infrastructure and real estate strategies were amongst top quartile funds, the firm claimed.
Sinding was bullish on future performance due to EQT’s active ownership approach in navigating the impacts of a rising rate environment. In addition, he still saw a window for exits to happen in stable growing sectors such as software, healthcare, and infrastructure.
“Inflation is gradually coming down, so we see some indications of confidence in improvement of the capital markets. (…) The IPO market is picking up slightly. As this overall sentiment continues to improve, we hope that buyers and sellers are increasingly able to [transact],” he said, asserting that there is still a huge need for private capital.