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European private equity group EQT has raised €22bn for the largest buyout fund in its 30-year history, following other marquee names in managing to raise substantial sums of money when many other firms are struggling.
It took the Stockholm-listed manager more than two years to raise the fund, which had an initial target of €20bn and is 40 per cent larger than the previous €15.6bn pool closed three years ago, EQT said on Tuesday.
The successful fundraise is the latest demonstration of how investor cash is flowing in greater quantities to the most established buyout groups. Last year EQT’s peers, including CVC Capital Partners and Warburg Pincus, raised record funds, while many smaller, newer groups struggled.
Speaking to the Financial Times before the closing, Per Franzen, head of EQT’s private equity business, predicted “a pick-up in deal activity in private markets”, as other private equity groups put their best-performing companies up for sale in order to monetise investments and spur new fundraising.
“We see that many of the players on the sidelines the past two years are more actively pursuing monetisation opportunities,” he said.
Investor belief that central banks are pausing interest rate increases has led to a revival of initial public offering activity, he added.
“There are real signs that IPO markets are reopening in Europe and the United States,” said Franzen. EQT is preparing some large investments to be ready to go public, he said, if market conditions remain amenable.
However, there might be fewer bargains in the United Kingdom after a valuation gap with United States markets was closing, he said.
“In some of the companies that have been listed in the UK, the discount they traded at versus key peers in the US had widened to record levels,” said Franzen. “Now with the recent market correction, some of those opportunities have gone away.”
EQT historically has invested in mid and large sized companies across Europe and North America in the healthcare, technology and services sectors.
The firm said that an “increasing share” of its fund investors came from wealthy individuals as the group seeks to diversify the types of investors that commit to its funds.
In total, private wealth channels accounted for about 10 per cent of the fund, showing the increasingly important role that retail money is playing in the private equity industry.
Historically, firms have largely received investors from large institutional investors such as pension plans and sovereign wealth funds.
The bumper fundraising haul is the latest boost to a firm that has expanded its assets under management rapidly since going public in 2019.
Over the past few years, EQT struck deals to buy Barings Private Equity Asia and US real estate investor Exeter Property Group.
EQT has also scaled up the size of existing businesses, including infrastructure. Its latest infrastructure fund is seeking as much as €21bn. In total, EQT now manages €232bn in assets under management. CVC, which is planning to list in Amsterdam this year, has €188bn under management while Paris-based Ardian manages $160bn.
The firm has been quick to deploy the new fund into new investments even before its closing, striking a series of deals last year, even as the wider market for dealmaking slowed.
Among them was the £4.5bn takeover of UK veterinary pharmaceuticals company Dechra, one of the largest leveraged buyouts in the UK last year.
EQT also this month made an offer to take private French digital music business Believe using cash from its latest flagship buyout fund.
