EQT: Stapled secondaries are ‘neat’

The firm used a stapled deal to 'push forward' fundraising on its $800m Asian mid-market fund, which closed on Wednesday.

EQT has closed Mid Market Asia III, a fund that will make control and “co-control” investments in Greater China and South-East Asia, on $800 million with help of a stapled secondaries transaction.

Secondaries Investor reported last summer that Partners Group had acquired stakes in two of EQT’s existing flagship funds and increased its commitment to the Asia fund.

Thomas von Koch/EQT
Thomas von Koch

Stockholm-headquartered EQT was one of a wave of established managers to instigate secondaries processes on their existing funds last year. Managing partner Thomas von Koch told sister publication Private Equity International that the experience of the stapled deal, which the firm ran without an external advisor, was a positive one and something it would consider repeating.

“It is a very neat way to provide a service to investors but also evidently to push forward fundraising efforts,” he said, qualifying these transactions are “a little bit opportunistic” depending on the balance of supply and demand of capital in the secondaries market.

Von Koch described EQT’s investment activity in Asia as a “well-kept secret”, noting that the firm – which is more readily associated with northern Europe and, recently, North America – has put $1.2 billion to work in Asia, predominantly in Greater China, since it started investing there in 2006. The firm inherited a portfolio of Asian assets from Investor AB, the group that is a founding shareholder of EQT, and raised $535 million for EQT Greater China II in 2006 in the same year, according to PEI data.

For the subsequent fund generation, EQT’s Asian investment activity was bundled with its European mid-market strategy into the €1 billion 2013 EQT Mid Market fund. The two strategies have now been uncoupled, with a €1.9 billion Europe-specific mid market fund raised in 2016.

Von Koch, who declined to comment on the performance of firm’s Asian investments, citing regulatory constraints, noted that the latest Asia fund is “top decile” and that looking across the EQT fund family, the firm’s funds in the region have been better performers than their European vehicles.