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00:00So this scale-up fund, your CEO, Pair Franzen, was on the Europe program talking about it.
00:05I mean, it's been a problem, right? For years, you get a brain drain. You get companies, once they get
00:10to a certain size, they leave Europe.
00:13How much of this is structural and how much of it is something that the scale-up fund, for example,
00:18can address?
00:19Yeah, well, thanks for having me on the show.
00:22You know, I'm taking over the chair position from Connie at a time when EQT has never been stronger.
00:26We had a record year last year in terms of our earnings at EQT.
00:30We had a record year in terms of distributions for our shareholders, for our investors and our funds.
00:34And now the question is, what's our next chapter? How do we focus on the next chapter?
00:39And there's a few things that I'm really excited about.
00:41The first is what you just mentioned, the scale-up fund in Europe.
00:43We think tech investing in Europe is underfunded. It's a huge opportunity.
00:47There's so much innovation in Europe in areas like quantum, in AI, in life sciences.
00:52And historically, there's been a lot of funding for the very earliest stages of that.
00:57But there's a gap between that and scaling those businesses up to become global champions.
01:02So that's what the EU Commission Fund is about, the tech fund is about.
01:06But, you know, we're going to run it as a private fund.
01:08We're going to raise capital for it. We've already gotten most of the capital in place for that.
01:12And it's a really exciting new initiative for us.
01:15You also have a ventures arm, a ventures business within EQT.
01:19And it's maybe something a lot of your competitors don't have.
01:22How do you think about that in a time where technology is advancing so rapidly?
01:27I mean, you just look at the growth of Anthropoc, for example, growing quicker than, you know, Zoom during the
01:32pandemic or Google during the dot-com bubble.
01:35Why is it important to get into companies in an early stage right now with technology changing as rapidly as
01:42it is?
01:43I think there's a couple of things that are important.
01:44Well, one is getting into those companies early because a lot of the value is still being captured in the
01:48private markets before these companies are staying private longer.
01:52And so a lot of the value is being created before they become public.
01:55So it's important to get in early, even for our investors and for our private wealth clients to get in
01:59early into these companies.
02:00But the other point, which is interesting, is the connectivity that we're seeing between the early stage investing strategies and
02:07our later stage strategies, our buyout strategies and our infrastructure strategies.
02:12There's so much more insights that we're pulling up from the early stage deal teams now and the deal flow
02:17and the companies, portfolio companies that we have and the impact that that has on the way we think about
02:22where do we want to allocate capital as a buyout investor?
02:24Where is AI adding value, creating value?
02:27Where is AI destroying value?
02:29And I think understanding that full spectrum of the investment landscape is something that is an advantage for EQT.
02:34It's got to be hard to understand, though.
02:36Just again, it feels like there's really massive tail risk on both sides, on the left tail and the right
02:42tail.
02:43So, you know, for example, for a company like IFS that is a strong company, you want to take it.
02:49How do you think about something like that when the market has a hard time digesting what its future is?
02:54Can you still go public with companies like that or do they need to stay private for longer?
02:58Well, I'm not going to comment on specific about IFS, but I can talk a little bit about how we're
03:01approaching software and the sector strategies generally.
03:04And, you know, it is sector by sector.
03:06So we've developed a framework where we've gone sector by sector and trying to understand where the tailwinds, where the
03:11headwinds, the subsectors that are being affected.
03:14I do feel like in software the incumbents have sort of the advantage here if they execute quickly.
03:22They have the opportunity to use their data, to use their workflow proprietary know-how to cement their position.
03:31But the position they have is not unimpeachable.
03:33They're going to be winners and losers.
03:34And I think it's going to boil down to how well the management teams in these incumbent software companies are
03:39able to execute.
03:40I guess the question is, though, do markets understand that?
03:42And it gets to the broader volatility, I guess, in the IPO market.
03:45The U.S. has been a little bit better.
03:46But how are you thinking about exits, specifically via IPOs in Europe?
03:50You were one of the most active funds in exits.
03:54You were the most active in ECMs, in equity capital markets, in 2025.
03:59How does 2026 look in Europe when there is so much volatility in it, and especially around tech names?
04:05I think the windows for public markets open and close.
04:07One of the things that we like to do at EQT is to be really globally diversified.
04:1165% of our investments are actually outside of the United States, in Europe, and in Asia.
04:16As you may know, we just recently closed the largest private equity fund in Asia ever.
04:21It's a $15.6 billion fund that we just announced a few weeks ago.
04:25And we're seeing a lot of traction in Asia in terms of investors' appetite for more exposure to Asia,
04:31more exposure to the CapEx cycle in Asia, the AI infrastructure story in Asia.
04:35And so there are different points in time when different parts of the market, different geographies,
04:40are more in favor or more out of favor.
04:43And I think that's how we think about getting liquidity back to our investors is being more globally diversified.
04:48Has higher energy costs not dampened that a bit?
04:50Because the U.S. has been generally more protected,
04:53and there have been more acute concerns in both Asia and Europe about what higher oil prices will do.
04:57Yeah, that increases the volatility generally in the markets and investors' sort of caution on markets.
05:03But as a longer-term investor, we have a horizon of five-plus years on all of our investments.
05:09We're really looking through this current volatility and looking at the fundamentals driving businesses.
05:14You do have some big deals that have been happening.
05:16And in the pipeline, I mentioned Intertech, which itself is a pretty big deal.
05:20Are you expecting ticket sizes of around that to continue, or are those sorts of ones one-off?
05:26Or is this the environment to really go big, to really be swinging large?
05:30There are definitely – the pipeline of larger deals is increasing both in Europe and in Asia and in the
05:34United States.
05:35We announced the AES deal here, which is a very large transaction.
05:38We are looking at the Intertech deal, as you've just mentioned.
05:41And we also have some deals in the market that have been announced recently in Asia, in Japan particularly.
05:47In fact, Japan is probably the one market that I'm most excited about globally in terms of buyouts.
05:52If you look at what's happening there in terms of policy tailwinds with the corporate shareholder reforms that have been
05:58implemented by the Japanese government and the Tokyo Stock Exchange,
06:02we're seeing a huge increase in both shareholder activism.
06:05The number of activist campaigns has doubled in the last five years, more than 100 activist campaigns a year now.
06:10And that creates – it sort of shakes things up to create deal flow for private equity firms, which are
06:15longer-term investors that can step into these activist situations.
06:18The Japan story has been so interesting because it was once a market, as you know well because your background
06:22is in Asia, that was so adverse to private equity and foreign ownership.
06:27But I feel like over the past year you've heard you and all of your peers talk about, I'm raising
06:32this fund, we're doing this, we're doing that.
06:34At what point does it start to feel crowded?
06:37Or are we already there that valuations are getting pushed higher because people are eyeing the opportunity in this region
06:42that previously wasn't there?
06:44Yeah, I don't think the market's crowded in Asia compared to the other markets around the world that we see,
06:48particularly in Japan.
06:49It's a very large economy.
06:50I would actually argue that the Asian private equity industry is undercapitalized.
06:55If you look at private equity as a percentage of GDP, in Japan it's something like 0.4% of
07:00GDP, and in developed markets it would be four or five times that level.
07:04So it's still an underpenetrated asset class.
07:06If you look at the other side of the supply of capital, if you look at global private equity allocations
07:12around the world,
07:12only 3% of an institutional investor's allocations of private equity funds, private equity capital is being deployed into Asian
07:20strategies.
07:2197% is still being invested in the United States and in Europe.
07:25So it's early days, I think, in capital formation for buyouts in Japan and in Asia.
07:30Just for you, Sean, before I let you go, there has been, I mean, I think it was ignited,
07:33this conversation about AI and workers probably by the standard charter CEO who said they're replacing low-value human capital,
07:40which is probably a painful way to be labeled if you are one of those people that are losing your
07:45job.
07:45How are you thinking about how your workforce changes and the type of person you hire and the type of
07:52person that stays with the company is,
07:54again, these advancements happen so quickly.
07:56I think you have to have people in your organization that are more AI native.
08:00You need to hire people that are more AI native.
08:01I believe that there will be some job dislocation that happens along the way,
08:05but the net-net effect, in my view, will be positive in terms of employment and in terms of productivity
08:09for the economy
08:10and growth for the economy as a whole.
08:12But what is, I think, important is to reshape the workflows inside the enterprise.
08:16That's the challenge that we're finding in our private equity portfolios.
08:20It's not a technology issue as much because the technology is available now to move in and drive productivity gains
08:25from AI.
08:26The question is how do you redefine the workflows and restructure the workflows internally in order to take advantage of
08:32the AI.
08:32Are the CEOs willing to do that or is this a kind of bury your head in the sand moment
08:36and you need someone like an EQT to lift you out and wake you up to the reality?
08:39I think you can argue that doing this is easier as a private company, as a public company, number one.
08:43But I think the big challenge is that we've been taught to think linearly in the way that things get
08:48done inside a business
08:49and we need to think more iteratively and doing things in parallel
08:51because now you can do things all at once using AI instead of having to wait for one task to
08:56be completed before you start the next.
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