EQT Q1 Earnings Call Recap: Strong Fundraising Offsets Exit Uncertainty

What's Happening

EQT AB, the global private markets firm, reported a robust Q1 2025 with fee-generating AUM growing to €142 billion (up 7.6% YoY), driven by successful fundraising with Infrastructure VI hitting its €21.5 billion hard cap and BPEA IX securing over $10 billion in commitments. Despite executing €4 billion in both investments and exits during the quarter, management cautioned that market volatility and 90-day tariff negotiations will likely depress exit activity for the remainder of 2025.

Why It Matters

• Market turbulence is testing the resilience of private markets, with EQT emphasizing its experience navigating previous cycles

• Fundraising momentum continues despite challenging market conditions, reflecting investor consolidation toward established managers

• Private wealth expansion represents a strategic growth avenue with the launch of EQT Nexus Infrastructure and upcoming US products

• CEO transition comes at a pivotal moment as Per Franzén prepares to succeed Christian Sinding in May 2025

The Key Moves

• Infrastructure VI closure at €21.5 billion hard cap demonstrates continued appetite for infrastructure assets even amid market volatility

• Strategic exits including Galderma's multi-phase sell-downs (€10+ billion in gains), Nord Anglia's innovative $14.5 billion "private IPO," and IFS minority stake sale at €15 billion valuation

• Evergreen platform expansion with EQT Nexus Infrastructure launch showing 70% year-over-year inflow growth in Q1

• Recession preparedness highlighted with >€50 billion dry powder, limited debt maturities before 2028, and minimal direct tariff exposure

By The Numbers

• FAUM: €142 billion, up 7.6% from €132 billion in Q1 2024

• Investment activity: €4 billion in Q1 2025; €23 billion LTM (up 35% from €17 billion LTM Q1 2024)

• Exit activity: €4 billion in Q1 2025; €14 billion LTM (up 133% from €6 billion LTM Q1 2024)

• Fund performance: Q1 valuations up 1% on average; underlying operating performance up ~4% offset by FX and listed asset declines

• Listed portfolio impact: -9% from March 31 to April 14, signaling potential Q2 valuation headwinds

• Headcount: 1,893 FTEs, up 5% from 1,802 in Q1 2024

• Private wealth: EQT Nexus NAV of €1.2 billion with Q1 inflows up 70% YoY

Key Players

• Christian Sinding (CEO): Emphasized EQT's readiness to navigate uncertainty and highlighted the firm's ability to emerge stronger from market cycles

• Per Franzén (Incoming CEO): Focused on continuity and EQT's strong global platform with nearly 1,300 clients and 2,000 colleagues across 25 countries

• Gustav Segerberg (Head of BD): Detailed fundraising progress and cautioned about potential renewed headwinds in the fundraising market

• Kim Henriksson (CFO): Outlined EQT's resilient financial model and flexibility to manage costs while supporting long-term growth initiatives

Analyst Sentiment

• Positive (Morgan Stanley): Infrastructure fundraising strength demonstrates investor appetite despite market uncertainty

• Cautious (Bank of America): Exit timeline concerns with potential for extended holding periods given market conditions

• Optimistic (UBS): Private wealth opportunity appears durable even amid volatility with significant NAV growth

• Mixed (JP Morgan): Carried interest recognition timing for newer funds remains uncertain given changing market conditions

• Supportive (Carnegie): Portfolio resilience with limited tariff exposure provides protection against immediate threats

• Watching (ABG Sundal Collier): €100 billion fundraising target may require longer timeframe with extended fundraising cycles

• Constructive (Citi): Innovation in exit strategies like private IPOs demonstrates adaptability in challenging markets

• Neutral (SEB): Conservative outlook on EQT IX and Infrastructure IV entering carry mode before 2026

Key Questions

• Exit timeline: Will the 90-day tariff negotiation period significantly extend the ~30 planned exits for 2025?

• Fundraising velocity: How will extended fundraising cycles impact the timing of EQT XI and Infrastructure VII activation?

• Private wealth differentiation: How will EQT compete against established players in the US market when launching new evergreen products?

• Industry consolidation: Is EQT actively pursuing acquisition opportunities as market volatility accelerates consolidation?

• Carried interest outlook: If exit activity remains suppressed, will carried interest and investment income reach the €250 million recognized in 2024?

Key Quotes

"Unlike public markets, which react quickly and sharply to uncertainty, private markets are structurally different. We invest in long term trends that shape the future of society... We control the assets. This allows us to be agile, to drive transformation, take advantage of market downturns, but also stay focused on the long term." - Christian Sinding

"We have been through multiple years with low realisation volumes, and in this context, our rule of thumb as it relates to initial carry recognition for a fund – four to six years into its life cycle – will be exceeded for the funds that are next in line to enter carry mode, Infra IV and EQT IX." - Kim Henriksson

The Wrap

EQT demonstrated strong execution in Q1 with successful fundraising and strategic exits, but faces an increasingly challenging market environment that will likely constrain exit activity for the remainder of 2025. The firm's emphasis on portfolio resilience, significant dry powder, and limited direct tariff exposure position it to navigate market volatility, while its private wealth initiatives provide an avenue for continued growth. As Per Franzén prepares to take the helm in May, EQT's long-term structural advantages in private markets remain intact, though near-term uncertainty will test the firm's ability to maintain momentum in exits and carried interest recognition while pursuing its ambitious fundraising targets over a potentially extended timeline.