'We Should Be Bigger in US, but Long-term Growth in Asia': Outgoing EQT Chair

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00:00The current chair, Connie Johnson, and the incoming chair, Jean Salata.

00:05Guys, thanks very much indeed for spending some time at this Momentum moment, a momentous moment for your firm.

00:12Connie, let's start with you. You've got your guy, he's sitting next to you.

00:17Why is he the right person for the job?

00:21What can I say? He sits here.

00:22No, he's a super good leader. He's a good entrepreneur.

00:28And, you know, we care so much about soft issues.

00:31So we care about his personality, his style, his values.

00:35But also, before everything else, he's a super good investor.

00:38He has built the bearings.

00:40And then when we came together with him, we were able to integrate bearings in Niquity,

00:46but together build a global platform.

00:48And he's a perfectly positioned leader to continue to build this platform into the global leader that we aim to become.

00:55So a great investor and a great person.

00:59Wow, that's quite the compliments that you get coming from Connie there, Jean.

01:05Let's talk about kind of where you do see this firm going.

01:08Connie's set you up.

01:09He's got a great business.

01:10He's handing it over to you next.

01:12You are Asia-focused.

01:14You have been Asia-focused.

01:15Is that where we now see EQT's balance being?

01:19Is that the trend that we could follow in terms of where EQT goes next?

01:26Well, Connie's handing over the business at a time when it's never been stronger.

01:31And so we're in a position to really take advantage of all the opportunities in our industry that we see today.

01:36I think the opportunity is certainly in Asia, but it's really a global opportunity for us.

01:41We're a very global company today.

01:43Asia's an important part of that story.

01:44We're both in Singapore right now.

01:46We're having our board meeting here today and tomorrow.

01:49So it's a really critical part of our strategy.

01:52But we see tremendous opportunity for us to continue to accelerate our growth

01:56and drive our growth agenda that we've set out in our strategy.

02:01Connie, is this a shift, though?

02:04I think that's a question that people are asking.

02:06A couple of months ago, I think it was in an FT interview, but I think I may have seen it elsewhere.

02:10You talked about the fact that the focus should be on the United States,

02:13that that's where the balance of the business should be.

02:16You talked about maybe doing takeovers in the United States.

02:19Has that changed?

02:23Well, the U.S. is a big market, and we are too small in the U.S.

02:26We should be bigger there.

02:28But the long-term growth for us and for the world and for our industry is in Asia.

02:32And we don't really see those markets sort of competing about our attention or our capital.

02:39We look where we have the best investment opportunities to make.

02:42The key for us is that whatever we do, it's like a planned process.

02:47You know, this change that doesn't came up yesterday or the week before.

02:50We have done five CEO successions, all nicely planned with good candidate

02:55and a well-thought-through process around it.

02:58So it's no change.

02:59It's a continuation to build equity into the global platform that we hope it can become.

03:04Global platform.

03:05That is the key words that I'm hearing time and time again from you this morning.

03:10Connie, just to stay with you for just a moment, and I'll get Jean's take on this as well.

03:15Well, we're starting to hear talk that investors are looking to European firms, though,

03:21because they offer diversification, because they don't want to put money into the United States,

03:25that they want a more global benchmark in terms of the way they see their businesses needing to invest.

03:32Is that something that EQT is seeing?

03:35And is that part of that kind of that global story that you're talking about?

03:38Yeah, we have the lack to be ideally positioned to exploit that trend,

03:47and it's a very logical trend, because people understand with the geopolitical risk we see around us,

03:52diversification is critical.

03:55And we are very strong in Europe.

03:56We are very strong in Asia.

03:58We are weak in the U.S., but, you know, the diversification of what we can offer our investors

04:04is exactly what they're looking for right now.

04:06And it's not so that we're just buying paper, shuffling those around.

04:10We buy companies.

04:11We manage companies.

04:12We have people on the ground.

04:13We are local with locals.

04:14And that's a unique setup that I think we are rather lonesome about.

04:18And that's going to be the success or the key to our success going forward.

04:22Yeah, I would agree with that, Guy.

04:25We're seeing investors really thinking about rebalancing their portfolio

04:28and diversifying more, as Connie is saying, to Asia, to Europe,

04:33both because I think of geopolitical considerations,

04:37but also just in terms of valuation and even things like portfolio construction

04:41and portfolio concentration correlation around the whole technology space

04:47and the technology names in the U.S.

04:50and whether they feel like that is stretched

04:52and wanting to rebalance and diversify more into global markets.

04:56So that's something that we're seeing in our business,

04:58and it's benefiting our business, actually.

05:00John, do you see that you talk about benefiting your business?

05:04Is that going to make fundraising easier?

05:06Because the other thing we're hearing as well is that there's caution

05:08in the fundraising world right now, and some firms are struggling, others aren't.

05:13But maybe that geography that you talk about,

05:17that sort of home bias here in Europe, that Asia focus, that opportunity,

05:21do you think that's going to make fundraising easier for EQT?

05:23I think the answer is yes to that.

05:28And I think part of that's driven off of this dynamic.

05:31Part of it is also driven by the distributions that we're making

05:34from our investment programs back to our investors.

05:37As we've announced in our public information,

05:39we've had a record year of distributions,

05:41something like 20 billion euros of distributions back to our LPs

05:45at a time when people aren't seeing that many distributions.

05:48So it's a combination of performance distributions

05:51and some of this portfolio diversification geopolitical considerations.

05:57Connie, in the past, there has been a focus within the portfolio

06:01on renewables businesses.

06:04Now, clearly there is, and you can see this,

06:06obviously with what's happening with Orsted at the moment,

06:09there's been a significant amount of turbulence in that space

06:12as a result of what's happening in the United States.

06:14Are you going to stick with that?

06:16As you think about Europe, as you think about Asia,

06:18do renewables and that side of the business

06:20maintain a significant portion of the portfolio?

06:25Not a significant portion.

06:27And we are, of course, adopting the strategies

06:28where we think the investment opportunities are mostly attractive.

06:31Today we talk about energy transition,

06:33we talk about technical services,

06:35we talk about technical integration

06:37or technological integration cross geographies and cross sector.

06:40So it's not so much renewable in itself.

06:43and I think we are extraordinarily well positioned

06:47to exploit that being in the US, in Europe and in Asia.

06:52Technology is travelling cross borders

06:54and we need to be able to participate and play

06:56and follow what happens in each of the three different geographies

06:59that we're operating in.

07:01So renewables is there, but it's not an important,

07:03and it has never been,

07:05it has never been any transition has been what we're focusing on.

07:08OK, I guess I'm probably widening the lens a little bit too much.

07:13Jean, there's a number of key questions around AI at the moment.

07:17So I'm curious to get your take.

07:20In terms of the portfolio companies,

07:21what are you seeing in terms of the impact?

07:23What do you see going forward from here?

07:25How is EQT using AI in terms of its investment decision-making process?

07:29It's a question that all investors are asking at the moment.

07:32How can I use this technology?

07:33What impact is it going to have?

07:35What is your answer to that question at the moment?

07:40It's at the very top of our strategic agenda for the business.

07:43We are embracing it internally.

07:45We have teams of data scientists working on that internally.

07:48We have our digital value creation teams

07:50working with our portfolio companies.

07:52I think there's a couple of key things happening here.

07:54Number one, first and foremost, this is a productivity tool.

07:57A productivity tool that can be used by EQT to drive our investment performance

08:03and the way, the efficiency in our business.

08:05But more importantly, I would say it's a productivity tool

08:07across all the industries and sector thematics that we invest in,

08:11which is critical for driving value creation as we move forward.

08:15Secondly, I'd say what we're seeing in our portfolios

08:18is that having the right leadership team in place,

08:21those CEOs and management teams that get it

08:24and that are embracing AI quickly and moving quickly

08:27are going to be the ones that stay ahead

08:29and get ahead of these tremendous technology trends

08:33that are happening.

08:34So it's a critical part of our future strategy.

08:37And I think every single company in our portfolio

08:40needs to be focusing on this.

08:43Absolutely.

08:44And I'm sure your investors will be pleased to hear you say that.

08:47Guys, just before I let you go,

08:49Connie, I have to ask the question.

08:50This is the end in terms of your chair,

08:55but clearly not the end of Connie Johnson.

08:58And I suspect we're going to be hearing much more from you.

09:00Let me ask a simple question.

09:02What is next?

09:03I have a rather diversified private portfolio

09:10focusing on entertainment.

09:12I'm sure that many of you have seen ABBA Voyage in London.

09:15That's one of the projects.

09:17And I like to work with sort of things that is changing.

09:20So the technological change forming the future entertainment market

09:24is clearly an area of the like.

09:26But also biodiversity.

09:28I'm a little environmental muppet.

09:30I like to be able to make some good impact for the environment.

09:35And so you will see me in a couple of different sectors like that.

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