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EQT to Acquire Venture Firm LSP in Second Purchase Since IPO

EQT to Acquire Venture Firm LSP in Second Purchase Since IPO

EQT AB, Europe’s largest private equity house, is buying health-care focused venture capital firm LSP as it seeks to further diversify its offering to investors. 

EQT will pay as much as 475 million euros ($551 million) for the life-sciences investor, according to a statement provided Wednesday to Bloomberg News. An initial 450 million-euro payment in cash and shares will be followed by an additional 25 million euros contingent on certain fundraising targets, the statement shows. 

Amsterdam-based LSP manages 2.2 billion euros in assets, and its entire 34-strong team will join EQT. The transaction is expected to be accretive to EQT’s earnings in 2022. 

“This is a very strategic acquisition for us,” Michael Bauer, partner and co-head of EQT’s global health-care team, said in an interview. “Our focus so far in health care has been on established companies. This deal will enable us to invest in early-stage companies -- those firms need a different approach when it comes to assessment of scientific risks.”

EQT shares rose as much as 1.9% Wednesday. The stock was up 0.57% at 9:58 a.m. in Stockholm, giving EQT a market value of 491 billion Swedish krona ($57 billion).

The purchase of LSP is a rare example of a private equity firm making an acquisition for its own business, rather than to hold as a portfolio company in one of its funds. Firms are looking to widen what they can offer yield-hungry investors in the low-interest-rate environment. CVC Capital Partners in September agreed to acquire secondary buyout specialist Glendower Capital

“Given the strong cultural fit and the complementarity between our organizations, we are convinced that joining forces is a win-win,” said René Kuijten, a managing partner at LSP who will become a partner and head of EQT Life Sciences once the deal is completed.

Post-IPO Deals 

The acquisition is the second that EQT has made since its initial public offering in 2019. The Stockholm-based group agreed to buy real estate investor Exeter Property Group in a $1.9 billion cash and stock deal in January. EQT also sold its credit business to Bridgepoint and launched a growth equity strategy in 2020. 

EQT has been one of the busiest buyers in a record year for private equity dealmaking in Europe, having spent almost $22 billion in the region, according to data compiled by Bloomberg. It’s been active in the health-care sector and in March agreed to a 4.5 billion-euro acquisition of French laboratories firm Cerba HealthCare, its biggest deal of the year. 

Led by Christian Sinding and created by Sweden’s Wallenberg family, EQT went public in 2019. It was started as a way for investors to diversify into the Nordics, but has grown into Europe’s biggest PE firm and made a name for itself for moving fast in deal situations. The firm has more than 70 billion euros in fee-earning assets under management. 

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