Release Date: October 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- EQT AB (EQBBF, Financial) launched the BPEA IX Asia flagship fund with a target size of $12.5 billion, marking a 20% increase from its predecessor.
- The company reported strong fundraising activities, with EQT Infrastructure VI nearing EUR17 billion in commitments and EQT Active Core Infrastructure closing at over $3 billion.
- EQT AB (EQBBF) achieved EUR6 billion in investments during Q3, demonstrating a robust investment pipeline.
- The company strengthened its platform by adding over 60 team members, primarily in private wealth, enhancing its operational capabilities.
- EQT AB (EQBBF) is actively pursuing exits, with more than 20 exit events this year, showcasing its ability to generate liquidity for clients.
Negative Points
- Despite strong fundraising, EQT AB (EQBBF) faces challenges with a few pockets of underperformance in its portfolio.
- The company acknowledges that exit volumes are dependent on market conditions, which remain uncertain due to geopolitical and economic factors.
- EQT AB (EQBBF) has a significant portion of its portfolio still in value-creation mode, indicating that many assets are not yet ready for exit.
- The fundraising market has been challenging since 2020, affecting the pace and scale of new fund launches.
- The company faces potential risks from geopolitical uncertainties and trends towards deglobalization, which could impact investor confidence and market conditions.
Q & A Highlights
Q: Could you provide more color on the expected launches of new fundraisings and how you define the next cycle?
A: The next fundraising cycle is expected to be around 3.5 years for flagship funds, starting with BPEA IX in H1 2025. The EUR100 billion fundraising target includes both closed-end and evergreen products, with private wealth expected to account for 15% to 20% of the total.
Q: Why is the target fund size for BPEA IX a smaller increase compared to previous funds?
A: The target setting for BPEA IX reflects the current challenging fundraising environment. The Asian business is performing well, and the target is set to respect market conditions. The hard cap will be determined in consultation with clients.
Q: Can you elaborate on the market environment and sentiment, particularly regarding geopolitical risks and interest rates?
A: While lower rates are positive, geopolitical risks add uncertainty. The exit environment has gradually improved, but external factors continue to influence market conditions. We remain cautious but optimistic about future improvements.
Q: How do you plan to manage the shares that have recently come unlocked?
A: The 145 million shares that have come unlocked are held by over 100 individuals. Decisions on selling are made by the individuals, not EQT. Historically, about half of the shares from previous lockup expiries were sold over 12 months.
Q: What is the process for determining which funds and LPs get their capital back in a situation with multiple funds invested in an asset?
A: Decisions are made by different investment committees, considering conflict of interest perspectives. Each fund or investor makes independent decisions on whether to stay invested or exit.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
