EQT‘s impact strategy has raised €2.7 billion in “fee-generating commitments” so far, according to a spokesperson for the firm.
At this size, EQT Future becomes the largest pool of capital raised for a PE generalist impact strategy to date, according to publicly available data.
Summa Equity closed its third impact fund last year on €2.3 billion, the largest impact fund in Europe at the time, while TPG has so far raised $2.03 billion for Rise Fund III, according to the firm’s latest SEC 10K filing. KKR’s Global Impact Fund II, another large generalist fund, had raised $1.98 billion as per its most recent SEC filing.
EQT Future launched with a €4 billion target in 2021. Lead partner Simon Griffiths told NPM that it seeks to deliver “impact at scale” by investing in mature companies that are either “market leaders and larger businesses that we can pivot” to make more sustainable, or large impact-positive businesses that can be scaled further.
The fund was receiving “very strong support from our typical private equity investors”, said Griffiths, adding that family wealth has “particular relevance here”.
The fund has finalised two investments, both of which saw it co-invest alongside family offices. In June 2021, it acquired a stake in Swedish pest control company Anticimex. Melker Schörling AB, the investment company of the eponymous former Securitas CEO, was one of a number of co-investors and became the second largest shareholder.
From an impact perspective, the primary KPI for the Anticimex will be the sale of smart products. “We can correlate the sale to the reduction of biocide usage,” head of impact Jen Braswell said, referring to substances designed for conventional chemical-based pest-control.
The other confirmed deal followed a similar theme, as EQT co-invested in SHL Medical alongside Athos KG, the family office of pharmaceutical company founders Andreas and Thomas Strüngmann. A producer of medical autoinjectors, SHL’s products allow patients with chronic conditions to administer medications at home, thereby improving patient autonomy and easing pressure on healthcare institutions.
Working with family offices as co-investors and LPs creates a synergy when investing in portfolio companies, many of which are family owned, said Griffiths. The result is a “nice and virtuous circle between the sources of capital, but also sourcing the right deals”.
A third deal, yet to close, will see EQT invest in fruit R&D companies, SNFL and IFG. The companies produce fruit varieties through processes that do not involve genetic modification. EQT will become a minority shareholder, a compromise it is willing to make for the right company.
Speaking generally about the firm’s approach to minority or majority investments, Griffiths said: “The family may not be prepared to give up control and we can live with that. As long as we’ve got a proper seat at the table, and that we have a shared vision.”
Braswell added: “When I’m looking at the impact profile of the business, we’re looking at the management team, we’re looking at how much they are aligned with this idea of the purpose that we are injecting into businesses. If that alignment isn’t there, it’s unlikely that they’re going to meet our screen.”
EQT has chosen to comply with SFDR Article 9, after initially considering opting for Article 8. Braswell explained that, while the due diligence requirements are an “additional burden”, needing to ensure that all investments meet the definition of sustainable under the regulations is not a concern: “We know very well that we are building a portfolio and managing for impact in businesses that are only going to be in that category.”
EQT has linked 20 percent of its carried interest to ESG goals, but as yet has not incorporated impact targets directly. “As we evolve this strategy, how we think around impacts, how we measure impacts, how that links into our incentives, I think will evolve,” said Griffiths.