Finnish firm EQ Asset Management held final closes for two funds-of-funds in June. Eliza Punshi catches up with head of private equity Staffan Jåfs to discuss the fundraise and the firm's appetite to invest
Founded in 1994, EQ Asset Management operates as a fund-of-funds and invests in both Europe and the US. At the end of June 2020, it held a final close on €190m for its primaries-focused EQ PE XII North fund, and on €150m for its secondaries fund EQ PE SF III.
The primary vehicle, larger than its predecessor, had a target size of €200m and invests across country-focused funds, along with sector funds and special situations/turnaround funds in northern Europe that are below €500m in size. Meanwhile, EQ PE SF III focuses on portfolio acquisitions in the secondary market, and also backs GP-led transactions and continuation funds.
Both funds had held first closes in January, followed by second closes in April 2020 on €157m and €115m respectively.
Head of PE Staffan Jåfs credits the firm's marketing efforts, and the fact that half of the investors backing the new funds were existing LPs, for a successful fundraise despite the current environment: "We did a lot of heavy lifting to get people over the line for both our primary and secondary funds. In the end, both went over target."
Jåfs told Unquote there were 70 LPs in the primary fund and 40 investors for the secondaries fund. Nearly all (95%) were Finnish investors, while 5% were international, mainly US and German investors. A majority (60%) of the LPs were existing investors, with a third of LPs having backed the firm for at least three funds.
EQ PE XII North fund is already deployed at more than 60%, and the secondaries fund is just short of 40% deployed.
The fund manager has a two-year investment period and tries to deploy consistently regardless of market situation. One of Jåfs' key messages to its LPs is that it is impossible to time the market: "If you wait for the market to turn, you are too late. If we commit capital every two years, we still get a good time diversification as the capital will be invested over the coming five or six years. There will be some investments that will outperform and some that will underperform, but it will even out."
Similarly, for the secondaries fund, Jåfs says EQ has completed five acquisitions since Covid-19, without going into more detail: "In the secondaries market, it has been a bit lonely, as we took the decision to remain active for transactions that come to market, and we have been able to close five acquisitions during the Covid-19 pandemic. This has allowed us to cherry-pick funds we know well."
EQ raises a new fund every year, alternating between northern Europe and North America. Regarding plans for future fundraising, Jåfs says the firm is taking it day by day: "We are confident, and even though it is a competitive market, from a demand perspective, it should be good."
Deal is Recover's 23rd acquisition since it was established six years ago, and the third since being acquired by EQT
Gimv formed the climate control business in 2016 by merging Itho Daalderop and Klimaatgarant
Corporate venture arm Shell Ventures leads the round for the IoT energy systems software platform
GP invests in the company via Wisequity V, which closed on its €260m hard-cap in July 2019