EQT Executives Weigh a Buyout of $4.3 Billion Credit Arm
EQT Executives Weigh a Buyout of $4.3 Billion Credit Arm
(Bloomberg) -- Top executives at Swedish private equity firm EQT AB’s credit unit are considering a management buyout of the business, according to people with knowledge of the matter.
Senior management of the division have reached out to potential financial backers to gauge their interest in supporting a deal, one of the people said, asking not to be identified because the information is private.
The private equity firm said last week that it’s working with JPMorgan Chase & Co. to evaluate strategic options for the credit unit, which invests mostly in direct lending and distressed debt. EQT is considering a number of options for the business, and the review is still at an early stage, the people said.
EQT’s credit arm had 3.9 billion euros ($4.3 billion) of assets under management at the end of last year and contributes about 6% of the firm’s revenue, Chief Operating Officer Caspar Callerstrom said on a Jan. 23 conference call. A representative for EQT declined to comment.
The credit business’s growth prospects are further away from the firm’s core strategy, EQT said last week. The review is due to conclude before summer, according to Callerstrom.
EQT Credit’s management wouldn’t be the first to embark on a buyout in European direct lending. BlueBay Asset Management’s private debt division, now called Arcmont Asset Management, spun off into a separate business with the backing of private equity manager Dyal Capital Partners in June.
Private credit firms such as Idinvest, MV Credit and European Capital have also teamed up with new owners in a string of of ownership changes in the industry in recent years. Increased regulations have limited banks’ appetite for riskier lending.
EQT, the largest buyout firm in the Nordic region, completed its initial public offering just four months ago. The review could result in EQT keeping ties to its credit unit through a partnership setup, though the firm hasn’t made up its mind on the best route forward, Callerstrom said on last week’s call.
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