Up until last week, Swedish-based private equity firm EQT Partners was not on the real estate market radar. That all changed when Edouard Fernandez and Rob Rackind, the co-founders of UK-based real estate fund manager Wainbridge, and Fredrik Elwing, the placement agent formerly of Greenhill, joined forces with EQT to launch a pan-European real estate business.
The significance of such a move should not be underestimated. EQT, launched in 1994, has historical ties to prominent Swedish financial dynasty, the Wallenberg Family, which to this day still invest in EQT funds. And with this powerful backer EQT has managed to raise approximately €22 billion across 17 funds from more than 300 global institutional and professional investors. The firm’s performance record is pretty impressive as too: the average gross money multiple on sold deals from EQT’s buyout activities over the last 20 years is 3x, the firm said.
And while the bulk of the firm’s capital has been put to work in the buyout market EQT are no strangers to new asset classes branching out into infrastructure in 2008 and credit investing in 2010. Thomas von Koch, managing partner at EQT, has said that the firm is well known for its entrepreneurial spirit and has never been afraid to expand into different geographies and try out new strategies. As he told sister publication Private Equity International in December, there is a business to grow and if it does not grow it, it won’t retain what it has and so cannot develop.
This spirit is what attracted the Wainbridge duo, they said. They were well aware how EQT was one of the most respected private equity firms in the world, with a vast network and strong resources. And they claimed to adopt a similar mind-set. Like them, EQT started out as an entrepreneurial outfit with a keenness for developing their investments.
EQT won’t have things all their own way, market sources told PERE. One Nordic-based real estate fund manager said that, although EQT’s reputation and existing investor base should provide them with a platform to get going, replicating the firm’s private equity success in private real estate will not be easy. One issue, another source said, was that although the Wainbridge duo come with a strong real estate background, including time spent overseas, their current firm is UK-focused. More partnerships will need to materialize for it keep growing into the wider region.
Regardless, once EQT is up and running the real estate sector can expect more than just empire-building. The firm regularly plays up its commitment to environmental, social and governance issues (ESG), for example. It teamed up with other Nordic buyout firms to establish a code of conduct in order to improve the transparency of fund managers. In April, EQT also filed its first RI Transparency Report, according to the new PRI Reporting Framework.
Transparency is another key theme for EQT. In 2013, on the back of some heavy public scrutiny of private equity in Scandinavia, the firm moved all its various funds onshore under a new holding company called EQT Holdings.
And firm works hard to engrain its ethos into new joiners of the organization, running a ‘boot camp’ in Stockholm so they understand how just how EQT thinks and operates. As it burrows its way into private real estate investments, we shall no doubt develop a sense of that as well.