Private equity group EQT has held the closing of the EQT Mid Market fund. Interest in the new fund was strong, with 95 per cent of the EUR1.1bn capital committed by existing EQT investors.
The fund is advised by a dedicated team of 35 investment advisory professionals based in Copenhagen, Frankfurt, Hong Kong, Shanghai, Singapore, Stockholm and Warsaw. The team has cumulative experience from advising on more than 30 middle market transactions in prior EQT funds with an aggregated transaction value of over EUR3.4bn.
The EQT mid market team is led by Jan Ståhlberg, one of the founders and deputy managing partner of EQT Partners.
The EQT Mid Market fund is the latest addition to the EQT range of funds and investment strategies. The fund is backed by high-quality international institutional investors including pension funds, insurance companies and family offices. The investor base is also well diversified in terms of geography with 51 per cent of the fund commitments being raised from institutional investors in the Nordic region, followed by 22 per cent from the rest of Europe, 16 per cent from North America and 11 per cent from Asia.
EQT believes many middle market businesses often lack the expertise needed to expand into new markets, the operational best practices needed to improve profitability and the governance frameworks required to become market leaders. Additionally, EQT believes many middle market businesses can benefit from internationalization, particularly by taking advantage of the increased trade linkages between Europe and Asia, and that there is a significant opportunity to transfer business models and best practices across these geographies.
The EQT Mid Market fund intends to invest in companies with strong market positions, solid growth platforms and ambitious owners and managers that can benefit from EQT’s approach and platform. The fund will primarily focus on buyouts and growth equity investments. Deal flow is expected to primarily come from family- and entrepreneur-owned businesses, corporate orphans and public-to-private transactions. The typical transaction value ranges between EUR80m and EUR150m in Northern Europe and between EUR80m and EUR200m in Greater China and Southeast Asia.
So far, the EQT Mid Market fund has invested in five companies: (i) Avenso, a gallery network and online retailer for photographic art serving the contemporary photographic art market in Germany, (ii) swiss smile, a dental chain in Switzerland, (iii) fibre based data communication provider IP-Only in Sweden, (iv) BackWerk, a German franchise system in the self-service bakery and quick service food market, and (v) China F&B, operating two international restaurant chains, Dairy Queen and Papa John’s Pizza in China.
Ståhlberg says: “EQT funds have, since inception 20 years ago, focused on supporting the implementation of growth initiatives in more than 120 portfolio companies using a clearly defined corporate governance model. It is the intent that the focus will continue to build on that experience, making sure that management in companies invested in have access to the best assistance and support. The overall goal is to make the companies stronger, more sustainable and well-positioned to continually prosper after EQT’s ownership.”
Conni Jonsson, managing partner of EQT, says: “It is a fantastic sign of trust that 95 per cent of the capital comes from investors in other EQT funds. We believe that with its access to EQT’s global industrial network and the investment advisory team’s extensive experience and local networks in both Europe and Asia, the EQT Mid Market fund is well-positioned with respect to the development of attractive companies in the middle market segment in Europe and Asia.”
