EQT AB (publ) Year-end Report 2022

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Jan 18, 2023, 01:22 ET

Resilience through active ownership and thematic focus

STOCKHOLM, Jan. 18, 2023 /PRNewswire/ -- "EQT concluded 2022 – a transformative year – as a global leader in active ownership. We relentlessly continue to future-proof our expanding platform, while navigating macroeconomic and geopolitical uncertainty," expressed Christian Sinding, CEO and Managing Partner, EQT Partners AB.

Highlights for the period Jan-Dec 2022 (Jan-Dec 2021)

Financial

Adjusted total revenue amounted to EUR 1,536m (EUR 1,623m). Management fees increased by 22%, which was offset by a decrease in carried interest. Adjusted total revenue decreased by 5%. Total revenues (according to IFRS) were EUR 1,497m (EUR 1,596m)
Adjusted EBITDA amounted to EUR 829m (EUR 1,100m), corresponding to a margin of 54% (68%). EBITDA (according to IFRS) was EUR 506m (EUR 970m), corresponding to a margin of 34% (61%). The margin decrease in 2022 was primarily driven by lower carried interest
Adjusted net income amounted to EUR 654m (EUR 989m). Net income (according to IFRS) was EUR 176m (EUR 909m)
Adjusted basic earnings per share amounted to EUR 0.634 (EUR 1.011). Adjusted diluted earnings per share amounted to EUR 0.634 (EUR 1.010). Reported basic earnings per share amounted to EUR 0.171 (EUR 0.928). Reported diluted earnings per share amounted to EUR 0.171 (EUR 0.928)
Financial net debt amounted to EUR 1,355m (EUR 88m in net cash), reflecting the financing of the BPEA cash consideration. Available liquidity includes cash and cash equivalents of EUR 645m, an undrawn RCF of EUR 1.5bn and ~EUR 1bn of management fees to be received in early 2023

Strategic

EQT completed the combination with BPEA, a leading private markets firm in Asia, creating a scaled and diversified global leader in active ownership strategies
EQT completed the acquisitions of Life Sciences Partners (LSP), a leading European life sciences venture capital firm; Bear Logi, a value-add logistics team focused on the Japanese and Korean markets; and Redwood Capital Group, a US-based residential value-add and core plus investment manager

Fundraising

FAUM increased to EUR 113bn (EUR 73bn), primarily driven by the combination with BPEA with FAUM of EUR 22bn at the time of closing, and by closed-out commitments in EQT X, which were partially offset by 9bn of step-downs primarily related to EQT IX and EQT Infrastructure V. Total AUM¹ was EUR 210bn
BPEA EQT held its final close of BPEA VIII at hard cap of USD 10.5bn in fee-generating commitments (USD 11.2bn in total commitments), making it one of the largest ever private equity funds raised by an Asia-based private equity firm
EQT set the target fund size for EQT Infrastructure VI at EUR 20bn. The fund was activated in December 2022, with EUR 2.8bn raised by year-end 2022. The majority of fundraising is expected to be concluded in 2023
EQT launched fundraising for EQT X (with a target fund size of EUR 20bn). Fundraising is expected to be concluded in 2023, with EUR 15.4bn raised by year-end 2022, and a further ~EUR 1bn committed to date in 2023
EQT Growth had its final close at EUR 2.2bn, representing the largest first time growth fund in Europe ever, and EQT Ventures III had its final close at EUR 1.0bn, making it Europe's largest venture capital fund committed to early-stage tech startups
Fundraising was initiated for EQT Active Core Infrastructure, with a target fund size of EUR 5.0bn. Fundraising continued for EQT Future
Fundraising was initiated for EQT Exeter US Industrial Value VI, with a target fund size of USD 4.0bn and EQT Exeter EU Industrial Core II, with a target fund size of EUR 2.5bn. EQT Exeter Industrial Core-Plus Fund IV had its final close at USD 3.0bn, exceeding its target size of USD 2.5bn

¹⁾ Total AUM is defined as the sum of fee-generating AUM, value appreciation of investments and fair market value of non-fee-generating co-investments as well as remaining commitments in active funds and committed capital yet to be fee-generating

Investment and exit activity²

Total investments by the EQT funds decreased to EUR 12bn (EUR 21bn)
Notable investments during the year include Envirotainer, United Talent Agency, Billtrust (EQT X), SPT Labtech, Recipharm's add-ons Arranta Bio and Vibalogics (EQT IX), InstaVolt, Stockland Retirement Living (EQT Infrastructure V) and Madison Energy Investments (EQT Infrastructure VI)
Total gross fund exits during the year amounted to EUR 11bn (EUR 30bn)
Signed exits include Facile.it, IFS and WorkWave (EQT VIII), EUR 2bn of exits in EQT Exeter (various funds), Saur (EQT Infrastructure III) and Bushu Pharmaceuticals (BPEA V)

²⁾ Includes both closed and signed transactions, if not otherwise mentioned

Investment performance

All key funds continued to perform On plan or Above plan
As of closing, BPEA VII and BPEA VIII were classified as key funds from the Group's perspective. The target returns for these funds are the same as for EQT's key funds within the Private Capital business segment, where "On plan" refers to expected Gross MOIC between 2.0-2.5x. BPEA VII is performing Above plan and BPEA VIII is performing On plan
During the year, fund valuations were generally supported by strong operational performance among portfolio companies, and certain exits above fund valuations, offset by lower public market valuation references

People and future-proofing

The number of full-time equivalent employees and on-site consultants (FTE+) increased and amounted to 1,790 (1,160) at the end of the period, of which 1,669 (1,059) were FTEs. Approximately half of the FTE growth was from business combinations. EQT has reduced the pace of hiring and is currently only making selective hires to secure growth in focus areas such as Private Wealth, and the regions North America and Asia
EQT established a Sustainability Committee, marking the first Board-level commitment to sustainability in the private markets industry
Bahare Haghshenas (Global Head of Sustainable Transformation), Christina Drews (Chief Operating Officer), Jean Eric Salata (Head of BPEA EQT and Chairperson of EQT Asia), Gustav Segerberg (Head of Business Development), and Ricardo Reyes (Global Head of Communications and External Affairs) joined the Executive Committee. Suzanne Donohoe (Chief Commercial Officer) was also appointed to the Executive Committee, and started in January 2023. Caspar Callerström (Deputy CEO) and Morten Hummelmose (Head of CR) stepped down from the Executive Committee, and will remain committed to EQT through advisory roles and the EQT Foundation
EQT issued a total of EUR 1.5bn of sustainability-linked bonds
EQT was included in the MSCI ESG Leaders Index and the Dow Jones Sustainability Indices
As per the agreements entered into as part of EQT's combination with Exeter, lock-ups on 7m shares expired. Any sale of the shares is subject to coordination by EQT, together with other previously released but not sold shares

Events after the reporting period

Investment levels in key funds as of 18 January 2023 were 10-15% in EQT X based on target fund size, 15-20% for BPEA VIII and 0-5% in EQT Infrastructure VI based on target fund size
The Board proposes a dividend per share of SEK 3.00 (SEK 2.80), to be paid in two installments, SEK 1.50 (SEK 1.40) in June 2023 and SEK 1.50 (SEK 1.40) in December 2023

Presentation of EQT AB's Year-end Report 2022

Financial analysts and media are invited to participate in a conference call, including a presentation at 08:30 CET.

The presentation and a link to follow the webcast and conference call live can be found here and a recording will be available afterwards.

To participate by phone, please register here. You will then receive your personal dial-in details, to be able to ask questions during the Q&A.

Information on EQT AB's financial reporting

The EQT AB Group has a long-term business model founded on a promise to its fund investors to invest capital, drive value creation and create consistent attractive returns over a 5 to 10-year horizon. The Group's financial model is primarily affected by the size of its fee-generating assets under management, the performance of the EQT funds and its ability to recruit and retain top talent.

The Group operates in a market driven by long-term trends and thus believes quarterly financial statements are less relevant for investors. However, in order to provide the market with relevant and suitable information about the Group's development, EQT publishes quarterly announcements with key operating numbers that are relevant for the business performance (taking Nasdaq's guidance note for preparing interim management statements into consideration). In addition, a half-year report and a year-end report including financial statements and further information relevant for investors is published. Finally, EQT also publishes an annual report including sustainability reporting.

Contact

Kim Henriksson, CFO, +46 8 506 55 300
Olof Svensson, Head of Shareholder Relations, +46 72 989 09 15
EQT Shareholder Relations, [email protected]
Rickard Buch, Managing Director, Communications, +46 72 989 09 11
EQT Press Office, [email protected], +46 8 506 55 334

This is information that EQT AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 07:00 CET on 18 January 2023.

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