The Swedish investment company, which has just bought the French Saur, has raised a record infrastructure fund in Europe. It is now preparing to go public.
The race to raise capital has reached a new level. The Swedish management company EQT announced Tuesday evening that it had raised 9 billion euros to invest in infrastructure … in the space of six months. With this amount, the fund sponsored by the powerful Wallenberg family dethroned Ardian, which had just completed the largest fund in the sector in Europe with 6 billion euros.
This record raised in infrastructure also places EQT at the same rank now as blockbuster funds in the flagship category of private equity: the acquisition of large companies with debt (LBO). European managers Cinven, BC Partners, Apax and Bain have raised between $ 7 billion and $ 9.4 billion for their latest fund. EQT itself raised more than 13 billion in 2018.
In Europe as in the United States, the infrastructure sector last year broke new records since 2005, and the dynamics of the managers of the European Union have nothing to envy that of the Americans in this segment: they raised 37.4 billion euros of capital, against 44 billion in the United States.
EQT rejects an application on ADP
Why the Singaporean Temasek, the Taiwanese life insurers Nan Shan, Taiwan Life, Cathay Life, the oldest Japanese insurance company Dai-ichi Life Insurance, or the American Oregon State Treasury and the Texas teachers’ pension system are are rushed at EQT?
This is because the Swede is generating double-digit returns in infrastructure worthy of the riskiest categories, such as LBOs. EQT has generated over 20% gross rate of return per year and a multiple of two to three times the stake for investors. That is almost double the average performance of traditional long-term infrastructure funds.
French Keensight doubles in size
The Rothschild team, Keensight Capital, has just announced that it has raised € 1 billion, more than double the previous fund. Expert in information and health technologies, the team has invested in 52 companies in Europe, generating a gross return of 39% and an average multiple of 2.8 times. Over the last 5 years, the turnover growth rate of the portfolio companies amounts to 22% per year and their EBITDA margin reached 26% in 2018.
EQT does not take more risk than the others. In France, its managers have taken control of the Saur hotly contested. “With this new fund, EQT wants to invest in 14 to 18 projects. But we now have the flexibility to invest in larger companies, including listed ones ”, says Matthias Fackler, infrastructure partner at EQT. However, the fund will not invest in Aéroports de Paris (ADP), which is in the process of being privatized, he replies. The issue has in fact become very political.
Listing in view
With 61 billion euros under management, EQT does not intend to stop there. The investment company will go public, like the Americans Blackstone, Carlyle and Apollo. Given its ease in raising capital, its approach is surprising. Ardian, which now manages $ 90 billion, has decided the subject and prefers to remain unlisted, like the big European players.
Matthias Fackler replies that “Even if nothing is decided, EQTwants to have a balance sheet to develop in new geographies, such as France, Italy or the United Kingdom, new strategies and acquire new teams ”. Small shareholders should also show a certain appetite in view of the performance of the Swedish.