Growth-hungry EQT boss faces an M&A puzzle
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Liam Proud
LONDON, Oct 17 (Reuters Breakingviews) -Christian Sinding is making no secret of the fact that his $40 billion private-markets group EQT EQTAB.ST wants to buy one of its peers. But he has two problems: high prices, and an acquisition currency that may be a turnoff.
The Stockholm-based buyouts-to-property group frequently mentions M&A, but its focus seems to be intensifying. Sinding said in a third-quarter message to investors that EQT was looking to strengthen its business “organically or through acquisitions”.
The private-market sector is consolidating. Earlier this year, BlackRock spent $12.5 billion on Global Infrastructure Partners, while General Atlantic bought fund manager Actis, which had $12.5 billion of assets at the time. CVC Capital Partners also went public, giving it an acquisition currency. The general sense among executives and advisers is that fundraising will be tougher in the future, and that the biggest and most diversified managers will have the most staying power.
Sinding has mentioned so-called secondaries businesses as a target. Traditionally, these vehicles buy stakes in other private equity funds. Probably the biggest deal would be France’s privately-held Ardian, with $166 billion of assets as of the first quarter of 2024. But Sinding might prefer to home in on a more focused target that specialises in so-called general partner-led secondaries, which involves buying minority stakes in companies owned by other private equity groups, typically through special vehicles known as continuation funds.
Total transactions in this business, known as GP-led secondaries, will hit $65 billion this year, investment bank Jefferies reckons, which is close to the 2021 peak. This business is thriving as buyout managers try to find alternative solutions for companies they are struggling to sell or list. Because these deals tend to include stakes in mature companies, they are also more liquid and therefore easier to sell to wealthy retail investors, another growth area for EQT. Major players include $8 billion Intermediate Capital Group and employee-owned HarbourVest, which might be too large and complicated to swallow, or Pantheon – part of New York-listed $6 billion Affiliated Managers.
Sellers know that buyers are eager to bulk up, making it easy to demand a high price. Tiny U.S. secondaries specialist Kline Hill is currently on the block for $500 million, Bloomberg reported, implying an eyebrow-raising 12% of assets under management. That’s roughly double the ratio that Ares Management paid for Landmark Partners, another secondaries firm, in 2021, according to Breakingviews calculations.
The other problem is that EQT’s Sweden-listed stock, with a fairly low free float of around 40%, isn’t the most liquid acquisition currency. That won’t be a problem if Sinding decides to pay in cash, but that limits him to relatively small acquisitions. In other words, EQT’s M&A quest is fraught with problems.
Follow @Breakingviews on X
CONTEXT NEWS
EQT on Oct. 17 said that it was assessing “strategic opportunities, organically or through acquisitions” to boost its business. In the past, it has bought rival private-capital managers like Baring Private Equity Asia in 2022 and real-estate specialist Exeter Property in 2021.
Rising multiples for private-market firms https://reut.rs/3zZYnNW
Editing by George Hay and Streisand Neto
Últimas noticias
Descargo de responsabilidades: Cada una de las entidades de XM Group proporciona un servicio de solo ejecución y acceso a nuestra plataforma de trading online, permitiendo a una persona ver o usar el contenido disponible en o a través del sitio web, sin intención de cambiarlo ni ampliarlo. Dicho acceso y uso están sujetos en todo momento a: (i) Términos y Condiciones; (ii) Advertencias de riesgo; y (iii) Descargo completo de responsabilidades. Por lo tanto, dicho contenido se proporciona exclusivamente como información general. En particular, por favor tenga en cuenta que, los contenidos de nuestra plataforma de trading online no son ni solicitud ni una oferta para entrar a realizar transacciones en los mercados financieros. Operar en cualquier mercado financiero implica un nivel de riesgo significativo para su capital.
Todo el material publicado en nuestra plataforma de trading online tiene únicamente fines educativos/informativos y no contiene –y no debe considerarse que contenga– asesoramiento ni recomendaciones financieras, tributarias o de inversión, ni un registro de nuestros precios de trading, ni una oferta ni solicitud de transacción con instrumentos financieros ni promociones financieras no solicitadas.
Cualquier contenido de terceros, así como el contenido preparado por XM, como por ejemplo opiniones, noticias, investigaciones, análisis, precios, otras informaciones o enlaces a sitios de terceros que figuran en este sitio web se proporcionan “tal cual”, como comentarios generales del mercado y no constituyen un asesoramiento en materia de inversión. En la medida en que cualquier contenido se interprete como investigación de inversión, usted debe tener en cuenta y aceptar que dicho contenido no fue concebido ni elaborado de acuerdo con los requisitos legales diseñados para promover la independencia en materia de investigación de inversiones y, por tanto, se considera como una comunicación comercial en virtud de las leyes y regulaciones pertinentes. Por favor, asegúrese de haber leído y comprendido nuestro Aviso sobre investigación de inversión no independiente y advertencia de riesgo en relación con la información anterior, al que se puede acceder aquí.
