EQT pulls continuation fund process for Waystar

Chief executive Christian Sinding had said on the firm’s Q1 earnings call it was pondering alternative liquidity options including continuation funds.

EQT, the world’s third-largest private equity firm according to the PEI 300, has pulled its continuation fund process for its portfolio company Waystar, Secondaries Investor has learned.

The Stockholm-headquartered firm decided not to pursue the transaction as the firm felt it did not get adequate pricing indications in order to proceed with the deal, according to two sources familiar with the matter.

In February, affiliate title Buyouts reported that EQT was exploring a process for the company, which provides software to manage the healthcare revenue cycle, including payment processes and streamlining workflows. At that time, sources told Buyouts the deal could ultimately be valued at $2 billion.

EQT acquired a majority stake in Waystar in 2019 alongside CPP Investments from Bain Capital, with Bain retaining a minority stake. The deal valued Waystar at $2.7 billion, according to a statement at the time. EQT invested from its Fund VIII, which closed on €10.8 billion in 2018.

Evercore was understood to be advising on the secondaries transaction. Both EQT and Evercore declined to comment.

Describing the current exit market as “a little lumpy” in its first quarter earnings call, EQT chief executive Christian Sinding said his firm was pondering alternative liquidity options for assets.

“If we can create more value in the companies and for our clients by keeping the business a little bit longer and going out into a more robust market, we’d rather do that,” Sinding said, noting that partial sales and continuation funds were on the cards.

The firm is targeting €20 billion for its latest flagship, EQT X, according to PEI data. The vehicle, which launched at the end of 2021, had collected at least €17.3 billion as of April this year.

Large single-asset continuation fund transactions have been a rarity rather than the norm of late, given constraints on capital, fundraising pressures and discounts in the market. Still, the market is open for the right transactions, market participants have told Secondaries Investor.

Last year, around 40 percent of GP-led transactions traded at a discount in excess of 5 percent to GPs’ latest holding value, according to a report from Jefferies. That compares with prior periods when the vast majority of transactions traded at, near or above par.