EQT AB has little appetite for the latest craze in finance — private credit — even as the investment firm looks for ways to expand its business.
(Bloomberg) — EQT AB has little appetite for the latest craze in finance — private credit — even as the investment firm looks for ways to expand its business.
“We have potential for geographic growth and growth in certain asset classes, but most or all of them will be connected to private equity, infrastructure or real estate,” Christian Sinding, EQT’s chief executive officer, said in an interview Friday.
“We don’t have any plans to enter into new asset classes like credit at this point in time,” he said.
Higher rates, banks curbing lending and the chance for new fees are bringing a raft of newcomers to private credit, turning the once niche asset class into a must have for many investment firms. DWS Group, Fidelity International, PGIM and T Rowe Price are among those buying or building a private credit franchise.
Stockholm-based EQT, meanwhile, has been busy integrating Baring Private Equity Asia, which it agreed to buy last year for €6.8 billion ($7.6 billion) in the biggest takeover of one private equity firm by another. Sinding, who’s predicted consolidation for alternative asset managers due to fundraising and financing pressures, said he sees more potential for growth in Asia and the US.
EQT is one of Europe’s largest investment firms, with about €126 billion in fee-generating assets at the end of June. To be sure, it has found itself vulnerable to the challenges facing the private industry and has extended the deadline to close its next €20 billion flagship buyout fund, Bloomberg News reported last month.
“There are fewer exits and and therefore there’s less cash being distributed to the investors,” Sinding said. “That means that it’s harder for them to commit now at the same pace as they were.”
The CEO said that, following an accelerated period of fundraising for private equity firms, EQT is back to a typical three-year cycle.
“That’s pretty healthy because it’s actually tough to be in continuous fundraising,” Sinding said.
Read More: Sweden’s EQT Shutters €600 Million Fund Focused on Listed Firms
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