EQT VIII holds final close on €10.75bn hard-cap

According to filings obtained by Unquote, EQT registered its eighth fund in September last year and was said to be targeting €8bn at the time. The GP registered the fund in Luxembourg, in line with the firm's strategy to bring all operations onshore.

EQT's in-house investor relations team led the fundraising. The firm has not worked with a placement agent on a private equity raise since using UBS for its sixth fund, according to Unquote Data.

The new vehicle follows the Swedish GP's €6.75bn EQT VII fund, which held a final close less than six month after launch in August 2015. According to Unquote Data, the fund was deployed at approximately 47% as of September 2017 and LPs were reporting a net IRR of 15.7%.

A primary concern of LPs considering commitments to Fund VIII was the high purchase price multiples paid by the GP, due to the ready availability of debt and the firm's focus on high-quality assets, according to documents seen by Unquote. The rapid deployment of Fund VII at an average entry multiple of 14.9x EBITDA was also cited.

However, these concerns were outweighed by the GP's strong realised returns of 2.7x over the firm's history, as well as strong interim performance (projected net IRR 13%) for Fund VII.

LPs were also attracted to the stability of EQT's investment team, which still comprises four of the five founders and its track record of never losing a senior professional to a direct competitor.

Additionally, EQT's sector expertise was viewed as a positive differentiating factor. The two most recent funds prior to the latest raise invested 53% in the TMT and healthcare sectors, representing a more defensive investment approach and a focus on less cyclical sectors.

EQT has raised several other funds across its various strategies since closing its seventh buyout fund, including its Infrastructure III fund, which closed on €4bn in February 2017. 

EQT also closed its latest mid-cap fund, EQT Mid Market Europe, on its €1.6bn hard-cap in May 2017. As of May, it was deployed at 20%, according to Unquote Data.

Investors
Approximately 70% of commitments came from previous investors, with strong demand from both existing and new investors, according to the GP. In line with previous funds, EQT VIII attracted commitments from northern Europe, including the Nordic region (23%), and the rest of Europe (26%). Beyond Europe, it collected 26% from North America, 18% from Asia and 7% from the rest of the world.

The Teacher Retirement System of Texas is the largest LP with a commitment of €275m, according to Unquote Data. Other LPs include AP2, AP6, Ardian, Argentum, CNP Assurances, Danske Bank Wealth Management, Elo, Fubon Life Insurance Company, GIC, GoldPoint Partners, HarbourVest Partners, New York City Retirement Systems, Northwestern Mutual Life Insurance, Partners Group, PFA Pension, TryghedsGruppen, Universities Superannuation Scheme and Varma.

Investments
In line with previous funds, EQT VIII will focus on making investments in northern Europe. It invests across three core sectors: healthcare, TMT, and services, as well as selectively investing in industrial technology and consumer goods. It will target equity investments of between €125-600m, resulting in a portfolio size of around 20 companies with an average enterprise value of €850m.

The fund will also invest in the US opportunistically with a total of 10% of commitments available for investments into US-headquartered businesses, though this could increase up to 30% including carve-outs.

People
EQT – Thomas von Koch (CEO).

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