EQT: Europe's private equity giant in a sector under pressure

Founded in 1994 by Conni Jonsson with backing from Investor AB, EQT is Europe’s largest listed private equity firm. Investor AB remains the company’s largest shareholder with just under 15% of the shares. Today, EQT is the world's second largest private equity firm, managing over EUR 270 billion on behalf of pension funds, sovereign wealth funds and, increasingly, private individuals. Its business spans private equity, infrastructure, real estate, and growth capital with a presence in more than 25 countries.

Revenue has two components. Management fees, calculated on the capital EQT manages, are stable and predictable. In addition, the company earns so-called carried interest, a performance-based fee that is paid out when fund returns exceed a certain hurdle rate. Carried interest, however, depends on EQT successfully selling its holdings at a profit, making it volatile and cyclical. This distinction is central to understanding why the share price has weakened. In an environment where it takes longer to sell holdings, performance-based revenue is hit first, while management fees remain intact.

There are several causes of the sell-off in the private equity sector. In February, consultancy firm Bain & Co reported that distributions to investors as a share of net asset value stood at 14% in 2025, the second lowest level since the 2008 financial crisis. At the same time, unsold holdings across the industry have grown to USD 3.8 trillion and companies are staying in portfolios for longer, on average seven years compared with five years previously. The longer a holding is kept, the harder it becomes to deliver strong returns.

The rules of the game have also changed. In 2015, when interest rates were low and company valuations were rising, annual earnings growth of around 5% in a portfolio company was sufficient to meet fund return targets. However, with today's higher financing costs and lower valuations, closer to 12% is required. (Financial Times, 25.02.2026) The bar for actively developing companies while under ownership has risen significantly.

A report by Hamilton Lane found that, even after stripping out big tech, private equity as an asset class has underperformed public equity indices over one, three and five years. (Hamilton Lane, 11.03.2026) Concerns around credit funds have also grown after several large American players were forced to restrict withdrawals or liquidate assets to pay out dissatisfied investors.

Geopolitics is also playing a role. The war in the Middle East and tensions around the Strait of Hormuz have affected almost a fifth of the world's seaborne crude oil supplies and significant volumes of LNG. Energy prices have risen sharply, stoking inflation fears and putting pressure on central banks to raise interest rates. BlackRock CEO Larry Fink recently has warned that a global recession cannot be ruled out if oil prices remain high.

Valuations of software companies have also come under pressure from concerns that AI could rapidly reshape the entire technology sector. Private equity firms have historically held large positions in technology and software, and when these valuations decline it feeds through into fund returns. This, in turn, makes it harder to sell holdings, delays performance-based revenue and makes it more difficult to attract new capital.

Against this backdrop, EQT's 2025 vision is particularly notable.. Adjusted EBITDA increased by 21% to EUR 1,642 million with a margin of 60%. The company sold holdings for a record-breaking EUR 34 billion. Galderma, the skincare company, alone accounted for over EUR 9 billion.

Capital flowing into new funds more than doubled to EUR 26 billion. (EQT AB Year-end Report, 22.01.2026) The infrastructure fund EQT Infrastructure VI reached its hard cap of EUR 21.5 billion, the Asia fund BPEA IX approached its cap of USD 14.5 billion and the new flagship fund EQT XI was launched with a target of EUR 23 billion. The dividend increased by 16% to SEK 5 per share. Franzén describes the current cycle as a EUR 100 billion fundraising cycle.

In an interview in March, Franzén laid out his view on where the industry is heading. (Australian Financial Review, 25.03.2026) Of the estimated 20,000 players active in private markets, only 5,000 have managed to raise new capital during the most recent seven-year cycle. The remaining 15,000 are so-called zombie funds lacking the capital to invest and struggling to recruit, which will eventually shut down or convert into smaller family offices. According to industry data from Preqin, the unrealised value in funds older than ten years has increased sixfold over the past decade, reaching over USD 1 trillion. (Financial Times, 23.02.2026)

Franzén argues that the ongoing shake-out benefits the largest players. In uncertain markets, listed companies tend to become cheaper to take private, large corporations tend to divest business units and weaker competitors are forced to dispose of assets. At the same time, institutional investors are increasingly consolidating capital with a select few managers who have a track record.

The acquisition of UK-based Coller Capital, announced in January 2026, is a clear step in that direction. The deal is valued at up to USD 3.7 billion and gives EQT access to the so-called secondaries market, where existing fund stakes are bought and sold between investors. That segment is growing by over 40% annually and tends to strengthen precisely when the rest of the market slows down, as more investors require liquidity.

Franzén also highlighted EQT's substantial investment in large-scale data centres and energy infrastructure as a growth driver. The company is one of the world's largest investors in this area, and its joint bid with Global Infrastructure Partners and others for US energy company AES Corporation, valued at USD 33.4 billion, highlights the scale of its ambition. Franzén believes that demand for data centres and energy for AI far exceeds the supply and that this imbalance will persist.

EQT is trading at a premium compared with European peers such as CVC and Partners Group, at around 21 to 22 times expected earnings for 2026. The Coller deal involves the issuance of approximately 81 million new shares, diluting existing shareholders’ holdings. The sector as a whole lacks clear positive catalysts in the near term and if earnings forecasts continue to be revised downward, the shares will not appear cheap despite the sell-off.

The question is whether the industry's problems are temporary or more lasting. EQT’s record results for 2025, the broad flow of new capital and the move into secondary all speak in its favour. However, geopolitical uncertainty, rising energy prices and depressed technology valuations mean the recovery could take time. Analysts' average price target is around SEK 400 to 410, an upside of approximately 40% from current levels. (Investing.com, 04.2026) The next reporting date is 22 April, when Q1 2026 results will be released. Vontobel offers a broad range of leveraged products with EQT as the underlying, allowing investors to take both long and short exposure based on their own market view.