Jen Braswell

EQT has closed EQT Future Fund, its private equity impact offering, at €3 billion.

EQT Future launched with a €4 billion target in 2021 to invest in mature businesses that contribute positively towards climate and nature or health. Its LPs include King Baudouin Foundation, New York City Employees’ Retirement System and New York City Police Pension Fund, the New Private Markets database shows. In addition to fund commitments, the firm has raised €600 million for co-investments, taking the total amount raised to €3.6 billion.

Despite missing its target, EQT – which collected two NPM awards last month – has successfully raised the largest generalist private equity impact fund on record. TPG closed its third Rise Fund at $2.7 billion in November, narrowly missing its $3 billion target. KKR raised $2.8 billion for its second Global Impact Fund, which closed in the same month.

“When EQT future was launched, there was an expectation that the trajectory of growth of impact-focused capital would be faster and that there would be more, which is why the initial target was set,” head of impact Jen Braswell told NPM. “Frankly, considering the headwinds in the market and considering also the number of other impact funds that were hitting the market at the same time, I think we’re really excited to be landing where we’re landing as a first-time strategy within EQT, as a quite differentiated strategy investing in mature businesses.”

The fund is 40 to 45 percent deployed, per a statement from the firm, having made three investments: pest control service provider Anticimex; Bloom Fresh International, which develops diseases resistant fruit varieties; and autoinjector developer SHL Medical. The firm declined to comment on fund performance so far.

The strategy has a longer hold period than most PE funds, and expects to exit investments after an average of seven to eight years. This gives the firm “the ability to deploy ’patient capital’, giving us the added engagement time with our portfolio companies that sometimes is needed to realise an impact case”, said Braswell.

Getting deals done while still fundraising was important in helping potential LPs understand the investment thesis, according to Braswell: “It’s maybe not intuitive to where impact investing was even five years ago to think about investing in a large mature business and pivoting it by helping to incentivise a new product line, which was the case for our Anticimex investment. And so being able to actually demonstrate that, and show our action to contribute to driving the impact case by building in those incentives [and] steering the business towards the more impactful product, really does [help].

“Impact does take time, of course. If you’re trying to pivot a big company, it’s not something that you’re going to be able to show the end result right away. But what we have been able to demonstrate is direction of travel,” she added.

At launch, EQT committed to tying 20 percent of its carried interest to sustainability objectives. This remains the case, though the firm is still working out how best to measure impact.

“We will likely be looking to learn more about impact measurements and impact linked carry. We started with what we were calling ESG plus, which was kind of state of the art when we launched EQT future. And I think as we’re learning more, we’re getting more excited about the possibilities,” Braswell said.