EQT AB (publ)

Good morning, everyone, and welcome to the presentation of EQT's first half report. We've set for 2023 to be the year of execution, and for the next half hour, we will provide an update when it comes to our progress in fundraising, thematic investments, performance, and of course, our financials. As always, if you've registered ahead of the call, you should have received an email with your personal PIN code to participate in the Q&A. You can also click the telephone conference at the top right corner of the live stream window to ask questions. So with that, I'll hand over to Christian. Next slide, please.

Good morning, everyone. We've continued to execute on our strategic plans during the first half of the year. We launched DQG Nexus, our first product to offer individual investors access to DQG's diverse range of investment strategies. We've largely finalized the integration BPA and it's gone quicker and been smoother than expected. And we're realizing the benefits of having a global diversified platform. We're also the first private markets firm to set science-based targets. And now we take the next major step with EQT's net zero guidelines, whereby all of our funds portfolio investments should be on track to deliver on their own net zero pathways by 2040 or before. Being at the forefront of sustainability will make our portfolio companies more valuable, And it also strengthens IKITI's position as a climate leader in private markets. The fundraising environment remains challenging, but we're still making quite good progress. IKITI 10 has reached over 90% of its target fund size, and we expect to reach the 20 billion euro target. Infrastructure 6 is currently at about 11 billion, and we're also there confident in reaching the 20 billion target next year. However, the newer fund strategies are more impacted by the current fundraising environment in terms of time and size. EQT is now at 126 billion in feed generating AUM and 224 billion in total AUM. And we have more than 50 billion of dry powder to invest during these interesting times. EQT has invested 11 billion euros in H1 of this year, more than twice the capital compared to the first half of last year. And of course, we remain laser focused on performance for our clients and our businesses and our buildings. All of our key funds continue to develop on or above plan. And we've taken action to manage higher interest rates to ensure portfolio companies can focus on strategic and operational long-term value creation and transformation. We continue to patiently explore exit opportunities. Halfway into this year, we're executing according to our plans with closed deals of around 4 billion euros. And announced a few, we've also announced a few that are not yet closed and working hard on the pipeline. Like for like, including BPA, we've grown management fees by over 20% compared to the first half of last year. while remaining focused on costs and scaling initiatives. And this is now reflected in our margins. Next slide, please. Since going public in 2019, she's grown to become a global leader in active ownership strategies. In PEI's latest ranking, we're the top three globally in private equity, and one of the only three firms in the world to raise more than $100 billion over the past five years. We've been taking market share steadily, jumping from 30 billion to over 100 billion raised. In infrastructure, a business we started in 2008, we're now top five globally, and we're already one of the largest in the world in value-add infrastructure. And Real Estate Equity Exeter is now in the top 10, having been number 486 when it was founded about 16 years ago. Our strategy is to be an active owner, where we transform companies and assets to drive performance for our clients. And this is why we're not in credit, an asset class where one is not really an owner, and thus we're also not focused on accumulating insurance assets. We are what we like to call ourselves performance chasers. Next slide, please. While challenging and taking more time, EQT's growth is broad-based. Across private equity Europe and North America, private equity Asia with BPA, infrastructure and real estate, we've already raised substantially more capital in EQT 10 compared to EQT 9, And BP8 was a record fund, being one of the largest private equity funds ever raised by an Asian-based private equity fund. And you can see Exeter's latest U.S. value-add logistics fund flows at more than twice the size of its predecessor and almost a billion above target, again, due to strong performance. We're continuously winning new clients, having more than doubled our client base since 2019. And our clients are on average increasing the size of their commitments across vintages. This trend continues in our flagship funds, despite the broader trend of clients now in the short term decreasing commitments in the current market environment. Growth is underpinned by top quartile performance. And four out of four of the key equity funds that are in realization or X mode rank also in the top quartile of distribution to paid-in capital. In other words, actual cash distributions to our clients, which is incredibly important through the cycle. Next slide, please. So the market for actively managed alternative assets is expected to double by 2030 and then double again by 2040. Companies are increasingly staying private. There's a little bit of an echo from the studio team, so if you could fix that, that'd be great. So companies are increasingly staying private. And in the US, the number of private equity-backed companies has grown steadily, while the number of public companies has actually seen a long-term decline. In a private environment, we can take a long-term view and deploy capital to truly transform and build businesses. by developing rapid EV charging networks, as in the case of Instavolt, or transforming transportation fleets while driving consolidation, as we're doing in Nordic ferry infrastructure, or automating and digitizing B2B and B2C relations, as in the case of Build Trust in North America. Our overall portfolio is thus performing quite well, but there remain pockets of underperformance that we're attacking together with our industrial advisors. Looking at a different angle, across all of our equity equity funds since inception in 1994, approximately 73% of our returns are attributable to sales growth and margin expansion. 25% is related to strategic repositioning, and only 2% is attributable to debt pay down. And in infrastructure and real estate, we transform companies and assets with a similar fundamental approach to value creation. Looking at our asset classes, outperform public markets across cycles for the past 20 years and more. And with the in-private markets, EQT is a top quartile manager outperforming most of the private markets as well. Next slide, please. So here we show that deal activity is cyclical, as you've seen, but markets always come back and the long-term trend is upwards. So now in the global economy, as we approach peak rates and inflation gradually coming down, we do see some indicators of confidence improving in the capital markets. Public equity markets are up year to date, paced by big tech and volatility has come down a bit. Debt market conditions are gradually improving, equity capital markets activity, IPO activity has picked up slightly. And also as this overall sentiment continues to prove, we hope that buyers and sellers are increasingly able to meet. All in all, while investment needs in areas such as infrastructure, energy transition, digitalization of societies, the changing healthcare infrastructure around the world, all those capital needs are still vast. So there's a huge need for private capital in the world. But uncertainty remains in the global economy. So we remain, as we say internally, positively paranoid, hoping for the best, but preparing also for the challenges that might be ahead. So EQT has a financial model. Next slide, please. Where our minimum fees are contractually recurring based on client commitments, which are typically 10 years or more in length. We're diversified across asset classes and regions. Our flagship funds are expected to deliver eight and a half billion euros of carried interest equity over the life of the funds, the flagship funds alone. And combined with our contractual management fees and our scalable cost base, it means we have a very generative, cash generative business model. And we're one of the few truly balance sheet light public alternative managers. We have a long-term opportunity to continue to scale our flagship funds and our recent initiatives, as well as to launch new initiatives. For example, the growth asset class hardly existed four or five years ago, and now we have a $2.5 billion growth fund. We're establishing a similar strategy in Asia, and we're considering a healthcare growth strategy as well. In addition to these types of initiatives, we expect to grow through acquisitions, Always with top performance and a great cultural fit being the key criteria, of course. Next slide, please. Being in a growth industry doesn't mean everyone will win. Larger managers like us are taking share with funds over $5 billion, raising almost 40% of capital in 2022 compared to only 20% in 2017. Last year, first-time fund launches were down by 40%. And the spread between bottom and top and bottom quartile performance is 18 percentage points. So being at the top of the performance league and the size league in combination is important. The foundation of our success, of course, starts and ends with our people and our culture. And we also have been able to strengthen our team, for example, with Francesco Storace just joining EQT infrastructure as a partner coming from Enel, one of the world's leading alternative energy producers. And this is further strengthening our commitment and expertise in areas such as the important energy transition. And of course, we're continuously developing the network of industrial advisors to make sure that all of our portfolio companies are supported and challenged in the best possible way. Looking at future proofing, we've been ahead of the curve in areas such as sustainability and digitalization and strive to remain there. For example, we're aiming to be the most AI literate investment organization in the world. using our own in-house developed AI platform, Mother Brain, to build on that, something we've been working on for soon 10 years. But it's also about developing new distribution channels, such as we're doing with EPNexus. And to hear more about that, I now hand over to Gustav. Next slide, please.

Great. Thank you, Christian. So, as we talked about in our Q1 announcement, we continue to see very interesting long-term opportunities in the private wealth space. Private individuals historically face difficulties investing into our industry due to ticket sizes, complex liquidity management, and longer lockups. However, this is changing with more appropriate structures, and we expect allocations to increase in the coming years. From an EQT perspective, we're attacking this on multiple fronts. First of all, we're aiming to increase the share of private wealth capital in our traditional closed-ended strategies through deeper and new distribution relationships. Secondly, we're launching broader semi-liquid strategies such as EQT Nexus in order to create solutions which are suitable for private individuals. And thirdly, we're looking at launching asset-specific strategies tailored for private individuals looking for specific sector exposure. In order to be able to capitalize on this significant market opportunity, we're also strengthening our capabilities. During the last two years, we've built a strong team and we now have around 50 employees working with private wealth across client coverage, product development, brand and operational excellence. And we're expecting to further build out these capabilities in the coming 12 to 18 months. Next slide, please. We're excited that we now have launched our first semi-liquid strategy, which offers easy access to a range of EQT strategies through one single investment. EQT Nexus will invest across our value add strategies with the key benefits being lower investment amounts, the possibility for periodic liquidity, and a simplified way to be fully invested from day one. We started off in mid-May, so still early days, but we're off to a very promising start, both from an end client perspective, as well as the interest from distributors. However, as we said before, this is a long-term opportunity for us, and it will take time to scale. As a reference, we have one peer that launched a fairly similar product approximately four years ago, which is now at around 3 billion euros in AUM. EQT AB has made balance sheet investments, which has now been transferred to EQT Nexus in order to seed the fund. This means that EQT Nexus starts off with an NAV of around 350 million euros and underlying EQT fund commitments of around 700 million euros. Going forward, for ICT Nexus, the rule of thumb is that approximately two-thirds of the NIV will be fund commitments and hence included in the fund sizes for the underlying funds, such as ICT 10 or Infra 6, while approximately one-third will be investments outside of the funds and hence fee-paying AUM on a standalone basis. And with that, let's move into an update on the fundraising side. Next slide, please. Despite the tricky market, we have raised more than 10 billion euros across the platform during the first half of 23. In Nikiti 10, we've closed out more than 18 billion euros, and we're highly confident that we will reach the 20 billion euro of target fund size, even though the tail end is taking slightly longer. Certain clients, including several private wealth platforms, have communicated that they require additional time to finalize their subscription and that the fundraising will therefore continue into early 2024. Infra 6 has held its first close with approximately 11 billion euros. A significant majority will be raised in 2023, and the fund will be open well into 2024, when we expect the fund to reach its target fund size. Newer strategies, such as, for example, IktiFuture, an active core infrastructure, continue to progress, but more slowly, and hence, it's also harder to reach the target fund sizes in today's market. EQT Exeter US Industrial Value Fund 6 held its final close at $4.9 billion, exceeding the target size of $4 billion and close to 2.5 times the size of Fund 5, driven by the top decile performance and the scaling benefits for Exeter being part of the EQT platform. However, also in real estate, we sense that the fundraising pace has slowed. We continue to focus on the current fundraisings of US Multifamily II and the European Logistics Core Plus II, which will both continue well into 2024. Finally, the EQT Public Value Fund has decided not to raise additional commitments, effectively moving into a closed-ended structure. This means that the fund will discontinue further fundraising and return proceeds to clients as value is realized. There is no time limit for exiting the portfolio companies and public value will still be able to support the existing portfolio companies with additional capital if needed. As a reminder, the public value fund represents less than half a percent of our fee generating AUM. However, our approach to this topic is in line with our way of developing the business, where we try new things and not everything will be a home run, but we always take responsibility and address issues directly. in order to ensure the best outcome for our clients and other stakeholders. And with that, I will hand over to Olof. Next slide, please.