The private equity industry is facing challenges in closing deals due to expensive credit, hesitant banks, and a semi-open IPO market.
EQT Group emphasizes the importance of focusing on fundamental value creation in companies and exploring alternative avenues for exits instead of relying solely on the public markets.
Deep dives
Overview of the Super Atern Conference
The podcast episode takes place at the Super Atern Conference in Berlin, where the first live recording of a dry powder episode is held. The guest for this episode is Christian Sintig, the CEO of EQT. The episode discusses the current environment in the private equity industry and the challenges faced in making deals happen.
Positive Paranoia and Capital Markets Anxiety
The discussion revolves around the concept of 'positive paranoia' and how the underlying asset class in private equity is performing well. The portfolio companies of many private equity firms, including EQT, are experiencing double-digit growth. However, the nervousness in the capital markets is making it difficult to close deals due to expensive credit, hesitant banks, and a semi-open IPO market.
The Return to Deal Making and Future Transactions
The return to deal making at scale is dependent on the stabilization of the global economy and the capital markets. When the world shows signs of stability, deal flow is expected to increase, as there is a flood of transactions waiting to happen. The deal flow in the private equity industry, including at EQT, remains strong, but challenges exist in getting deals done and through the funnel.
Focus on Fundamental Value Creation and Exits
The discussion emphasizes the importance of focusing on fundamental value creation in companies and taking a long-term approach. Exits in the current market environment are challenging, with public markets being difficult and disruptions to management during the exit process. EQT emphasizes the need to prepare companies early and be ready to execute exits when the stars align. The firm is also exploring alternative avenues for exits instead of relying solely on the public markets.
Christian Sinding, the CEO and managing partner of EQT Group, joins us for our first live recording. We explore when deal markets will finally stir to life and how EQT takes intelligent risks in a period of overwhelming of uncertainty.
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