EQT’s new fund goes global

The dynamic works both ways. Lessons EQT learned from Qinyuan can also be applied to its more recent investment in BackWerk, Germany's leading self-service bakery franchise.

"Even though the company is in Germany and not in China, there still was a lot we learnt from Qinyuan that we could feed back to our team in Europe," says Martin Mok, a partner with EQT in Hong Kong.

He sees this ability to leverage the experiences of its teams in Asia and Europe as one of the private equity firm's key strengths. It is also part of the rationale behind the EQT Mid Market Fund, which has reached a final close of EUR1.1 billion ($1.48 million) after just under one year in the market. The new vehicle will focus on mid-market buyouts and growth equity investments in Greater China, Southeast Asia and Northern Europe. EQT is headquartered in Sweden.

The fund will be deployed by 35 investment advisory professionals across the globe, focusing on family- and entrepreneur-owned businesses, corporate orphans and public-to-private transactions. Ticket sizes will range from EUR80-200 million in Asia and EUR80-150 million in Europe.

Given that all prior vehicles managed by EQT have either focused exclusively on Europe or Asia - with the exception of its infrastructure funds which also deploy to North America - this latest vehicle represents a departure that has not necessarily appealed to all LPs.

Mok explains that for some investors in EQT Greater China II - which closed at $545 million in 2006 - a limited mandate prevented them from committing to a Europe-focused fund. At the same time, more conservative backers of EQT's European funds don't care for Asian risk.

"It was a big strategic move for EQT," says Mok. "On the other hand we have the benefit of making sure EQT as a company is sufficiently integrated so that we are best geared towards the next five years when more Chinese companies will be seeking cross-border expansion."

Despite the challenges, LPs have responded well, with existing investors accounting for 95% of the corpus. Of this group, 51% are from the Nordic region, 22% from the rest of Europe, 16% from North America and 11% from Asia.

So far the fund has made five investments, one of which is in Asia: China F&B Group, the Chinese franchise operator of international restaurant chains Dairy Queen and Papa John's Pizza. The other's are: German art retailer Avenso, dental chain Swiss Smile, Swedish data communication provider IP-Only, and BackWerk.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Fundraising
• Europe
• Greater China
• Buyout
• China
• Europe
• buyout
• Fundraising
• EQT Partners