EQT sells credit business to Bridgepoint

The deal gave EQT Credit an enterprise value of less than £350m, according to two sources close to the situation. There were five or six bidders in the early stages of the sale auction, said one source, with Schroders being one of the final bidders, according to the other source.

The similarity of Bridgepoint's credit business to that of EQT, ensuring very few structural changes in the way the business will operate going forward, is understood to have been a deciding factor in the process.

The deal process was unaffected by the coronavirus pandemic, with all procedures carried out over video conferencing, according to one of the sources.

Bridgepoint was previously considering growing its credit business organically, but opted for an acquisition instead to speed up the process, according to one of the sources. The deal, combined with the GP's existing credit business, will mean the enlarged group will have approximately €7bn in assets under management. 

Bridgepoint had been in the market to raise for its first credit fund since May 2018. The fund is said to have a €750m target, though it remains unclear if this process is to continue following the acquisition.

EQT announced at the beginning of 2020 that it was evaluating strategic options for its credit arm, for which, it said at that time, "the growth prospects are in avenues further away from EQT's core business of active ownership".

EQT Credit is the smallest of EQT's three business segments with approximately €3.9bn in assets under management as of 31 December 2019. One source told Unquote the business was considered non-core. The credit business segment had total revenues of €35.8m in 2019. 

Established in 2008, EQT Credit focuses on two core strategies of direct lending and special situations. It has a team of 27 investment professionals based in London, New York, Munich and Stockholm and employs approximately 40 people in total.

EQT Credit closed EQT Mid-Market Credit II on €2.3bn in 2018. The family of funds also includes EQT Credit Opportunities III, which held a final close on €1.3bn in December 2017, surpassing its €1.15bn target. The fund makes both primary and secondary investments.

Bloomberg reported in February this year that a police investigation into alleged wrongdoing was underway for German cancer drug manufacturer Atlanta Health Group. EQT Credit had provided a €331m loan to the healthcare company, and the report suggested the outcome of the enquiry could prove damaging for the Swedish GP.

JP Morgan acted as financial adviser and Kirkland & Ellis and Travers Smith acted as legal advisers to EQT on the Bridgepoint transaction.

Meanwhile, Bridgepoint was assisted by Rothschild for corporate finance advice, PwC for financial and tax due diligence and structuring advice, Clifford Chance and Simpson Thacher for legal advice, and Lockton for insurance.

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