Sean Barrett values EQT's carry business at about 10bn euros, roughly a third of its market cap, and expects carry to top a billion euros of annual net revenue.
EQT trades at about 20 times management fee earnings versus roughly 35 times forward net income for alternative managers generally, a discount Barrett calls unwarranted.
Christian Sinding moved from CEO to chairman after six and a half years, with Per Franzen succeeding him as CEO, a planned succession Matt Reustle contrasts with US firms that wait for a triggering event.
EQT Scales Private Markets Returns Yet Trades at a Discount
EQT is a thematic private markets manager that grew from a Swedish family mandate into a global platform while keeping a narrow focus. Management fees rise with assets, local teams and tight governance support returns, and carry is a large business the market barely prices in. Sean Barrett argues the discount to other alternative managers is unwarranted.
Takeaways
EQT is a scaled, top-quartile thematic manager. Stockholm-based EQT manages about 270bn euros, with about 140bn fee-paying. That splits into private equity Europe and Americas at 35%, Asia at 20%, infrastructure at 30% and real estate at 15%. Flagship funds show roughly 2.5x gross multiples and 20% net IRRs.
Local teams and governance drive value creation. EQT runs more than 30 offices on a local-with-locals model. Each company is overseen by a troika that includes an independent chair, and the AI tool Motherbrain speeds acquisition searches. Owned companies grow revenue about 12 to 15% a year.
Narrow focus and long holds built big winners. The flagship mix has been about 40% healthcare and 60% tech-enabled services. EQT took IFS from a public company with a few hundred million of revenue to about 1.2bn euros of ARR, and held Nord Anglia 17 years, growing it tenfold.
Acquisitions added Asia and real estate platforms. EQT Asia comes from the 2022 purchase of Baring Private Equity Asia, which Sean first doubted. India is about 40% of its private equity. Exeter, bought in 2021, forms real estate, raises a vintage yearly and is about 90% industrial and warehousing.
Wallenberg roots shape culture and succession. Investor AB gave Conni Jonsson the mandate to create EQT in 1994. Attrition runs about 10% a year. CEO Christian Sinding became chairman after six and a half years and Per Franzen succeeds him, a planned handoff Matt contrasts with US firms.
Large fundraising targets face rate skepticism. EQT raised 75bn euros from 2021 to 2023 and targets 100bn next cycle, which doubters question given higher rates. Retail is about 10% of the business, with a vehicle launched in 2024 and five more planned for 2025.
Carry is undervalued against peers. Fees of about 1.5% produced roughly 2bn euros in 2024. Sean values the carry business at about 10bn euros, a third of market cap, and says EQT trades near 20 times fee earnings while alts trade at 35 times forward net income.
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