European buyout major EQT has set a €15bn hard cap for its latest flagship private equity fund – but warned the vehicle was likely to take longer than usual to raise due to the coronavirus crisis.
The firm said it was also preparing to raise its fifth flagship infrastructure vehicle, as well as “exploring alternatives to raise additional capital” in the strategy.
EQT closed Infrastructure IV on €9bn just over a year ago.
Firm CEO Christian Sinding said, “The pandemic is impacting every society and every business across the globe, and this calls for responsible and active ownership. EQT’s portfolio companies are also affected, one way or the other, but given our thematic approach, the portfolio remains relatively robust.
“Furthermore, based on our experience from previous crises, the portfolio companies have prepared for a potential downturn and even though the magnitude of COVID-19 was unpredictable, having contingency plans in place is helping the companies respond faster.
“The situation also impacts EQT AB – to which extent depends on timing, scope and when the markets stabilize.
“Given today’s environment, fundraisings can take longer, exits are less likely and the overall investment activity is currently lower.
“Revenues are expected to be impacted as carry is dependent on exits and increases in unrealized values.”
EQT said its total investments in the first quarter of the year reached €1.8bn, while Q1 exits amounted to about €400m.
The firm said it was currently focused on developing existing portfolio companies further until market recovery.
AltAssets reported earlier this week that European private equity fundraising had collapsed in the first quarter of the year, as the rise of coronavirus decimated attempts at raising capital from LPs.
Buyout houses started the year in blistering fashion in terms of dealmaking, conversely, with Europe’s Q1 deal value reaching a new quarterly peak according to the latest data from PitchBook.
Covid-19 is set to put and end to that boom, however, with many sponsors either pausing or outright cancelling transactions amid concerns over valuations, financing and a prolonged period of market volatility.
PitchBook said €10.9bn was raised across 20 private equity vehicles in the region in Q1 – a massive drop compared to the same period last year, and an immediate death knell for the industry’s chances of reaching last year’s €90.5bn annual total.
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