EQT mulls infra GP-led secondaries process

The 2018-vintage Fund IV is about 75% invested and the firm wants to ‘ensure sufficient capital is available' to keep investing.

EQT is exploring options to expand its €9 billion EQT Infrastructure IV after a period of rapid deployment.

The Stockholm-listed investment manager is considering a range of options, it noted in a statement about the release of its first annual report since going public last year.

“Given the pace of investments in EQT Infrastructure IV, work has been initiated to ensure that sufficient capital is available for EQT Infrastructure IV to continue to make investments, either by bridging or extending the existing fund or by using the secondary market,” the statement noted.

EQT Infrastructure IV, which closed in March, made its seventh investment this week, teaming up with Canadian pension OMERS to acquire German fibre broadband group Deutsche Glasfaser from KKR, meaning the fund is about 75 percent invested.

When approached by sister publication Infrastructure Investor, the firm declined to comment further on the size of the extra potential capital or why it will not be launching a new fund.

Last month, EQT said it would be targeting €14.75 billion for its ninth private equity fund. A source told Infrastructure Investor that the manager is unlikely to want to have two significant funds in market concurrently.

In January last year, another source said that EQT had to significantly scale back demand for the fourth fund, which was said to be reaching €20 billion. It is believed the decision not to close above the €9 billion hard-cap was in order to maintain a more appropriate size, given that EQT Infrastructure III had closed on €4 billion.

EQT has run a secondaries process before. In 2017, Partners Group offered to acquire LP stakes in the €4.8 billion EQT VI private equity fund while committing to EQT Mid Market Asia III, as Secondaries Investor reported.

Around $3.45 billion of infrastructure funds traded hands in 2019, up 14.7 percent on the year before, according to data from intermediary Setter Capital.

In January, Partners Group co-chief executive and head of private equity David Layton said the firm was preparing for a boom in infrastructure secondaries volumes “on the back of record primary raising”.

– Rod James contributed to this report