Business and Financial Review • Oct 21, 2020
Business and Financial Review
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"The third quarter of 2020 has been busy with activities across the board. On the transaction side, EQT's thematic investment strategy continues to identify and execute attractive opportunities, with Danish based Natural Colors being a good example of a company supported by the sustainable consumer health and environmental megatrends. In total, EQT funds signed investments of EUR 6 billion and the pipeline continues to look stable. The portfolio value creation agenda is on track, but market uncertainties related to the pandemic remain. Even though only a few of the portfolio companies operate in the hardest hit sectors, a second wave and a prolonged pandemic may have a negative impact across the portfolio. Looking ahead, a number of strong EQT fund portfolio companies are being prepared for exits, should market conditions remain supportive.
There is a good demand for EQT funds, with the EQT IX and EQT Infrastructure V fundraisings running according to plan. In early October, EQT Real Estate II was closed at EUR 1 billion. I am also excited about the launch of EQT Growth, another core area for EQT's future expansion. With numerous growth opportunities in existing strategies and the launch of new strategies, we see the need to accelerate investments in people and our platform into 2021. Looking forward, we will continue our purpose-driven approach, both in EQT AB and the portfolio. We see continued structural growth and interesting long-term opportunities for EQT while remaining vigilant for risks."
Christian Sinding, CEO
Note: AUM for EQT IX as of September 30, 2020, was EUR 13.0bn. The difference from EUR 13.3bn in commitments as per 30 September, 2020, is due to a portion of EQT IX having USD as fund currency presented based on the exchange rate as per period end.
EQT AB (PUBL) QUARTERLY ANNOUNCEMENT Q3 2020 3
| AUM BY SEGMENT (EURbn) | Private Capital | Real Assets | Total |
|---|---|---|---|
| At June 30, 2020 | 22.0 | 14.4 | 36.5 |
| Gross inflows | 14.3 | 0.1 | 14.4 |
| Step-downs | (3.4) | – | (3.4) |
| Exits | (0.8) | (0.0) | (0.8) |
| FX and other | (0.1) | (0.1) | (0.2) |
| At September 30, 2020 | 32.1 | 14.4 | 46.5 |
| Since June 30, 2020 | 45.7% | -0.4% | 27.5% |
| AUM BY SEGMENT (EURbn) | Private Capital | Real Assets | Total |
|---|---|---|---|
| At September 30, 2019 | 21.9 | 14.8 | 36.8 |
| Gross inflows | 14.9 | 0.6 | 15.5 |
| Step-downs | (3.4) | – | (3.4) |
| Exits | (1.2) | (0.9) | (2.1) |
| FX and other | (0.2) | (0.1) | (0.3) |
| At September 30, 2020 | 32.1 | 14.4 | 46.5 |
| Since September 30, 2019 | 46.2% | -3.0% | 26.3% |
Note: Any investment activity in above tables (part of gross inflows and/or exits) is included based on its impact on fee-generating AUM. Individual deals in a period are therefore included based on remaining or realized cost, timing of transaction closing and only in funds which are charging fees based on net invested capital.
| Start | Committed | Cost of investments | Value of investments | Gross | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (EURbn) | date | AUM | capital | Total | Realized Remaining | Total | Realized | Remaining MOIC | ||
| Private Capital | ||||||||||
| EQT VI | Jun-11 | 1.3 | 4.8 | 4.4 | 3.1 | 1.3 | 10.4 | 8.3 | 2.1 | 2.3x |
| EQT VII | Jul-15 | 4.5 | 6.9 | 5.9 | 1.5 | 4.4 | 11.8 | 4.4 | 7.4 | 2.0x |
| EQT VIII | May-18 | 8.5 | 10.9 | 8.5 | - | 8.5 | 11.0 | - | 11.0 | 1.3x |
| EQT IX | Jul-20 | 13.0 | 13.3 | 1.1 | - | 1.1 | 1.1 | - | 1.1 | 1.0x |
| Real Assets | ||||||||||
| EQT Infrastructure II | Oct-12 | 0.7 | 1.9 | 1.7 | 1.0 | 0.7 | 3.4 | 2.8 | 0.7 | 2.0x |
| EQT Infrastructure III | Nov-16 | 3.4 | 4.0 | 3.4 | 0.0 | 3.4 | 5.4 | 0.1 | 5.3 | 1.6x |
| EQT Infrastructure IV | Nov-18 | 9.0 | 9.1 | 5.4 | - | 5.4 | 5.7 | - | 5.7 | 1.1x |
| Other | 6.1 | 4.8 | 7.2 | |||||||
| Total | 46.5 | 35.2 | 56.0 |
Note: Cost and value of investments reflect only closed transactions as per the reporting date.
| Gross MOIC (Dec 31, 2019) |
Gross MOIC (Mar 31, 2020) |
Gross MOIC (Jun 30, 2020) |
Gross MOIC (Sep 30, 2020) |
Expected Gross MOIC (Sep 30, 2020) |
|
|---|---|---|---|---|---|
| Private Capital EQT VI EQT VII EQT VIII |
2.4x 1.8x 1.1x |
2.3x 1.6x 1.1x |
2.3x 1.7x 1.2x |
2.3x 2.0x 1.3x |
On plan On plan On plan |
| Real Assets EQT Infrastructure II EQT Infrastructure III EQT Infrastructure IV |
2.1x 1.5x 1.1x |
2.1x 1.5x 1.0x |
2.0x 1.6x 1.1x |
2.0x 1.6x 1.1x |
On plan Above plan On plan |
Note: Data for current Gross MOIC reflects only closed investments and realizations. For Private Equity funds (part of segment Private Capital), "On Plan" refers to expected Gross MOIC between 2.0-2.5x. For Infrastructure funds (part of segment Real Assets), "On Plan" refers to expected Gross MOIC between 1.7-2.2x.
Assets Under Management ("AUM") represents the total committed capital from fund investors and net invested capital to which the EQT AB Group is entitled to receive management fees. All of the Group's AUM is fee-generating
Funds currently investing or with not yet realized investments
Business segment comprised of EQT's platform for credit investments comprised of Special Situations, Direct Lending and Senior Debt
The total amounts that fund investors agree to make available to a fund during a specified time period
First phase of a fund lifecycle after fundraising, in which most of a fund's committed capital is invested into portfolio companies. Management fees are normally based on committed capital during this period
A fund's Gross MOIC based on the current total value and cost of its underlying investments
Measures the share of a fund's total commitments that has been utilized. Calculated as the sum of (i) closed and/or signed investments, including announced public offers, (ii) any earn-outs and/or purchase price adjustments and (iii) less any expected syndication, as a % of a fund's committed capital
Where used on its own, is an umbrella term and may refer interchangeably to the EQT AB Group and/or EQT funds, as the context requires
EQT AB and/or any one or more of its direct or indirect subsidiaries (for the avoidance of doubt excluding the EQT funds and their portfolio companies)
Cost amount of realized investments (realized cost) from an EQT fund
A fund's expected Gross MOIC at termination, when a fund is fully realized, based on the estimated total value and cost of its underlying investments upon realization
The number of full-time equivalent personnel on EQT AB Group's payroll
The number of full-time equivalent personnel and contracted personnel working for EQT AB Group
Total committed capital for a specific fund
New commitments through fundraising activities or increased investments in funds charging fees on net invested capital
Value of realized investments (realized value) from an EQT fund. Refers to signed realizations in a given period
Total value of investments divided by total cost of investments
Investments by an EQT fund, measured at cost, net of any co-investments. Refers to signed investments in a given period
Funds with commitments that represent more than 5% of total commitments in active funds, respectively, as well as EQT Infrastructure II
Total cost of investments not yet realized (remaining cost). Management fees are generally based on net invested capital after the commitment period / investment period
Phase of a fund lifecycle after the commitment period, in which most of a fund's investments are realized. Management fees are normally based on the net invested capital during the period
Business segment comprised of business lines Private Equity, Mid Market Asia, Ventures and Public Value
Business segment comprised of business lines Infrastructure and Real Estate
Value (cost) of an investment, or parts of an investment, that at the time has been realized
Value (cost) of an investment, or parts of an investment, currently owned by the EQT funds
A fund's start date is the earlier of the first investment or the date when management fees are charged from fund investors
Step-downs in AUM generally resulting from the end of the investment period in an existing fund or when a subsequent fund starts to invest. Fees in a specific fund will normally be charged on net invested capital post step-down
Measure used in fundraising of an EQT fund as a fund's target level of investment return based on Gross MOIC
As of September 30, 2020, Credit had feegenerating AUM of EUR 3.6bn (EUR 3.7bn). Total investments made by the funds and related investment vehicles during the third quarter of EUR 0.3bn and total gross fund exits of EUR 0.3bn.
The divestment of Credit is expected to close in the fourth quarter of 2020.
EQT is a purpose-driven global investment organization with a 25-year track-record of consistent investment performance across multiple geographies, sectors, and strategies. EQT has raised more than EUR 75 billion since inception and currently has around EUR 50 billion in assets under management across 20 active funds within three business segments – Private Capital, Real Assets and Credit.
With its roots in the Wallenberg family's entrepreneurial mindset and philosophy of longterm ownership, EQT is guided by a set of strong values and a distinct corporate culture. EQT manages and advises funds and vehicles that invest across the world with the mission to future-proof companies, generate attractive returns and make a positive impact with everything EQT does.
The EQT AB Group comprises EQT AB (publ) and its direct and indirect subsidiaries, which include general partners and fund managers of EQT funds as well as entities advising EQT funds. EQT has offices in 17 countries across Europe, Asia Pacific and North America with more than 700 employees
More info: www.eqtgroup.com Follow EQT on LinkedIn, Twitter, YouTube and Instagram
Christian Sinding CEO
CFO +46 8 506 55 300 [email protected] Olof Svensson
Head of Shareholder Relations +46 72 989 09 15 [email protected]
Head of Communications +46 70 855 03 56 [email protected]
| Year-end Report January–December 2020 |
January 26, 2021 |
|---|---|
| Annual Report 2020 | March 31 - April 2, 2021 |
| Quarterly Announcement January–March 2021 |
April 22, 2021 |
| Annual shareholders' meeting 2021, Stockholm |
June 2, 2021 |
| Half-year Report 2021 | July 22, 2021 |
| Quarterly Announcement July–September 2021 |
October 21, 2021 |
This quarterly announcement has not been reviewed by EQT AB's auditors.
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