EQT AB (publ) (EQT.ST) Q3 2026 Earnings Call

0:00 Good morning, everyone, and welcome to EQT's Q3 announcement. Today, we're thrilled to announce the acquisition of Stockbridge, a leading U.S. real estate investment manager. And during the quarter, we also closed the Kohler Capital transaction, all while fundraising momentum, deal flow, and value creation remained strong. But before handing over to Per, let me ask again that we limit questions to two in today's Q&A so we have time for everyone's questions. So over to you, Per. Next slide, please.

0:30 Thank you and good morning everyone. Let me start today with some reflections on the PEI ranking published last week. After the acquisition of Kohler Capital, EQT is now the third largest private markets firm globally. We are by a distance the largest non-US firm. And we're the only firm in the top 20 without a private credit platform. In today's environment, this is an important differentiator. In a volatile and uncertain world, we are the performance-focused, trusted, reliable and strategic partner for investors. We're the global provider of international alpha. Thanks to the breadth of our platform, we can deliver unique opportunities and differentiated solutions.

1:22 Through our AI infrastructure fund, we provide access to the value creation in the world's second largest developer of data center capacity in 2026, EdgeConnex. In the Scale Up Europe fund, we provide access to the most attractive startups in Europe. The Scale Up Europe fund puts EQT really at the heart of the European growth ecosystem. It also helps us position EQT as the natural partner for global asset allocators that want to get access to private market opportunities in Europe. In our private equity strategies, we can give investors exposure to the demographic and economic growth in Asia. 60% of the economic growth in the world is coming from Asia, but only 5% of the capital raised for private markets funds are invested there.

2:15 Thanks to joining forces with Kohler, we can engage with clients on their strategic asset allocation considerations. We can provide clients with the most attractive liquidity solutions and we can help them stay invested in their winners and support them in rebalancing their portfolios. Today, with the acquisition of StockBridge, we're taking another step in the development of EQT and in making EQT an even more attractive partner for clients. As we stated in our first half update, broadening the thematic focus areas and growing our real estate platform is a strategic priority for us. performance in equity real estate remains strong, and we want to be able to offer investors access to more alpha in this asset class. We'll come back to Stockbridge shortly.

3:10 Today, we're really in a stronger position than ever before. I've never been more excited about what we're building. In a tricky environment for our industry, we continue to produce attractive deal flow and good returns for investors. Thanks to our strong local presence in our target geographies, we can unlock attractive investment opportunities in our prioritized sectors, and we find those opportunities both in the public markets and in the private markets. And we deliver the most compelling co-invest program globally. Over the last 12 months, we doubled our fund-based investments to 30 billion euros. At the same time, we sent back 29 billion euros to clients.

3:56 Over the past 24 months, distributions amounted to 58 billion euros. We will keep on investing in our value creation toolbox, in our AI capabilities and our capital markets expertise so that we can maintain the attractive value creation momentum in our portfolio, and that we can maintain those top-quartile DPIs in our key funds. On the back of our strong track record and the strong performance we've generated, our fundraising momentum is excellent, and we are taking market share. Over the last 12 months, global fundraising volumes for the industry are down 13%. During this... ...strategies to scale up Europe Fund and the AI Infra Fund.

4:44 including Kohler Capital, our fundraising outlook for this cycle is now 140 billion euros, which is up from the original guidance of 100 billion euros. This puts us in a position where we will have significant dry powder to invest in an environment where competition for deals is lower, and where public market valuation multiples for many of our where we will have significant dry powder to invest in an environment where competition for deals is lower and where public market valuation multiples for many of our target sectors are attractive in a long-term perspective. Next slide, please.

5:31 We closed the acquisition of Kohler Capital end of August and the combination is off to a good start. The secondaries market is one of the fastest growing areas of the private markets industry. Deal volume in the first half of 2026 is up 20% year on year. There are a number of forces behind this structural growth trend, including increasing client demand for liquidity solutions and private market investors wanting to stay invested with their best assets for longer. Our colleagues from Kohler EQT give us access to these capabilities and to arguably one of the longest and most consistent track records in the secondaries industry.

6:19 ACROSS THE MOST RECENT FLAGSHIP FUNDS, COLOR HAS DELIVERED FIRST QUARDIAL NET RETURNS. In the short term, at CollarEQT, we're focused on the launch of the fundraisings for the new generation of the private equity and credit secondary funds, on capturing the attractive growth opportunity that we're seeing in the insurance segment, where we really see strong demand for the structuring solutions that CollarEQT can offer. and we're focused on accelerating the product build-out both for our institutional clients and for our wealth clients. We remain confident in the target that we've communicated to double Kohler's fee-based assets under management in less than four years.

7:08 Next slide, please. The latest product addition to the EQT platform is the ScaleUp Europe Fund. In this strategy, we're off to an amazing start. Deal flow is above even our most optimistic assumptions. And it's clear that Europe doesn't have a startup problem, but it has a scale-up challenge. This strategy is perfectly designed to address this challenge and to capture this opportunity. And the fund has already announced seven investments, including iSci, Europe's leader in radar satellite intelligence, Tandem, a leading European clinical AI platform, and Mistral, the leading European sovereignty AI platform.

7:58 The pipeline that we see going forward remains deep across geographies, the targeted subsectors, and I expect the investment pace to remain healthy. Demand from investors globally for this fund is very encouraging, and we expect demand to significantly surpass the 5 billion euro target fund size. Next slide, please. Post being awarded the mandate to manage the scale-up Europe fund, EQT has become the preferred partner for talented founders and entrepreneurs. Most of them now want to have EQT and the scale-up Europe fund as a shareholder. And this is really also what we're seeing in the attractive deal flow that I just spoke about.

8:50 In addition to this, there's also a broader positive halo effect across all of EQT and the entire EQT platform. The win of this mandate to manage the Scale Up Europe Fund and the way we're delivering on this strategy has really elevated EQT's standing globally. Thanks to our track record, EQT being a true European success story, and post the endorsement from the European Commission EQT is now seen as the partner of choice for founders and global private market investors. Entrepreneurs in Europe are looking for a partner that can give them access to relevant sector expertise, operating capabilities, and really the support to help them win globally.

9:39 Investors from around the world are turning to EQT for access to the most attractive European investment opportunities and access to the most attractive alpha in Europe. We're the only platform in the industry investing into Europe across ventures, growth, life sciences, buyouts, secondaries and infrastructure, making us the natural partner for investors looking for exposure to this part of the world. Next slide, please. Let me next turn to the AI Infrastructure Fund. This is another example of a recently launched strategy where we see excellent momentum. In the quarter, NAV grew more than 20% to $11.5 billion, up from $9.4 billion at the end of Q2.

10:34 Just below half of that increase came from capital raising and the rest from value creation. We see continued strong growth ahead in NAV. To put the current NAV into perspective and to give everyone a better sense for the potential size that this strategy can achieve over time, EdgeConnex today has a total equity value of around $50 billion, so approximately four times the fund's current NAV. Over time, we expect the AI Infra Fund to continue to acquire shares in EdgeConnex from selling shareholders. Next slide, please. Let me Since our entry in 2020, EdgeConnex has grown into one of the largest data center platforms globally.

11:35 When ICT Infrastructure 4 acquired EdgeConnex, it was a regional data center operator with around 200 megawatts of contracted capacity. In 2026, EdgeConnex is the second largest developer of data center capacity globally. And actually ahead of every other private markets owned platform. Today, EdgeConnex has more than 90 data center sites across 26 countries on five continents. and 96% of contracted capacity is serving hyperscalers, investment-grade counterparties that have entered into long-term contracts with EdgeConnex.

12:22 Since our investment, contracted recurring revenue has grown more than tenfold, and the equity value has increased from around $1.5 billion to $50 billion. We expect continued strong growth for Edge Connects as of the end of 2025. Edge had around 1.3 gigawatts of contracted capacity. We expect to end 2026 at around 3.5 gigawatts of contracted capacity. In other words, the business has nearly tripled in scale in a single year. EdgeConnex is truly a unique asset. It's the only global independent pure play operator. And thanks to the integrated investment strategy that we have applied in equity infrastructure over the last years, EdgeConnex can bring power, fiber, and capital from across the equity infrastructure platform to the hyperscalers. And this is really a differentiated proposition.

13:31 EQT remains the largest shareholder, so we control this business. And with the open-ended AI infrastructure fund that we have set up, we can really keep scaling this business and also this strategy for years to come. Next slide, please. Yeah, and now we'll turn to our real estate business and the acquisition of StockBridge. EGT Real Estate is a top-performing platform with an excellent long-term track record. Since acquiring Exeter in 2021, we have doubled fee-based AUM and more than doubled fee-related EBITDA.

14:16 Today, we're investing one of the largest sector-specific real estate funds in the US and in Europe. Thank you very much. and to strengthen our team and broaden our offering. Stockbridge brings top-performing, diversified, open-ended core funds and complementary thematics to equity real estate, and it will strengthen our existing team for the industrial core plus and value-add strategies.

15:14 Stockbridge brings a 20-plus year track record and a team that's also culturally well aligned with equity. So with this transaction, we're building a stronger equity real estate platform with a broader and even more attractive offering for clients and a more well-positioned larger business that will be driving profit growth and margin expansion over time. It's 100% cash deal, and we believe that we have sourced this transaction at attractive terms for shareholders. Next slide, please. Thanks to Stockbridge, we will be broadening the EQT real estate strategies into new thematic focus areas. Stockbridge has an excellent track record in alternative living. We're also creating a more scaled and diversified platform.

16:06 Post-closing, the industrial segment will represent around 75% of assets under management and living will increase to around 20% of the business. And we will have a stronger offering of core and core plus products. In total, the combined platform will have around 600 full time employees and $42 billion of fee based AUM up from 25 billion today. I'm really, really excited to welcome Stockbridge and the Stockbridge team to EQT and look forward to the collaboration. I'll now hand it over to Gustav, who will provide you with more details on this transaction.

16:53 Thank you, Per. And good morning, everyone. We're very excited about expanding our real estate business and we think that we've found a great partner in Stockbridge. They have around 185 employees across six offices and manages over 16 billion US dollars of fee paying AUM on behalf of around 180 institutional clients. They've built the business across four main areas. First, alternative living. Stockbridge has realized 15 billion US dollars in value in manufacturer housing at a net IRR of close to 20% and a net MOIC of over 4x in one of the best real estate track record that exists in the market.

17:40 Secondly, the open-ended core, which is an established and high-performing product with $4 billion of fee-paying AUM and has delivered top 5% performance over the last one year, three years, and five years compared to PEARS. Thirdly, the industrial outdoor storage, an attractive niche within logistics where Stockbridge has a scale presence with over 2 billion US dollars of fee-paying AUM, highly complementary to IKT Real Estate's existing logistics offering. And fourth, separate managed accounts with around US$10 billion of VPing AUM that are both diversified and sector-specific across this risk spectrum and represents important relationship with strategic clients seeking targeted returns.

18:37 Next slide, please. We see a number of clear value levers in this. First, by adding Stockbrit's industrial outdoor storage expertise to EQT's logistics capabilities, we can continue to expand our leading industrial platform. Secondly, we're building out the alternative living side and broadening our thematic focus beyond logistics. Stockbrit's longstanding track record in alternative living gives us a unique platform to build out. Third, growing the core platform. We will aim to scale Stockbridge's open-ended core products through EQT's global client network and deal sourcing capabilities.

19:23 This is something that we've done before. In the last US real estate fund, the first flagship fund raised after we acquired Exeter, around 15% of the commitments came from EQT source clients. And in BPA 9, the same statistics was close to 25%. And fourth, we're planning to fully integrate the two real estate businesses and create a stronger business together with significant platform benefits across operations, analytics and AI. Next slide, please. So let me now turn to the financial contribution. For 2027, we expect Stockbridge to have fee-paying AUM of 17 to 19 billion US dollars.

20:12 management fees of 120 to 130 million US dollars and fee-related EBTA of 35 to 45 million US dollars. In the coming years, we expect fee-related EBTA for the stock business to grow by 15 to 20% annually. Next slide, please. Finally, let me also talk about how we structure the transaction to ensure alignment of interest and a focus on long-term growth. This is 100% cash acquisition with a base consideration of 375 million US dollars. 50% of the base considerations will be reinvested by the sellers in equity shares with similar type of lockups as we've seen in our other transactions.

21:04 On top of this, there is also an earn out of up to 175 million US dollars subject to certain performance targets. As Per mentioned, we believe that we sourced this transaction at fairly sensible terms where the base considerations represents a high single digit multiple of the 2027 fee related EBTA that you saw on the previous page. We expect this transaction to close in Q1, 2027. Next slide, please. So, turning to fundraising, where we see strong momentum across the platform. During the third quarter, net inflows and value development added another 42 billion euros to the fee-paying AUM.

21:54 This includes 34 billion euros from Kohler following the closing of the transaction. The key funds had net inflows of 11 billion euro during the quarter, which is largely attributable to the addition of Kohler and hence Kip9. We expect EQT11 to be activated in the next few months and hence that EQT11 will be included in the fee generating AUM by year end. On the back of the deals done in 2026, including Intertech, as well as the performance of EQT 10, we're seeing continued good momentum for EQT 11, while recognizing that the fundraise will continue throughout 2027.

22:46 As previously communicated, we expect to activate Infra 7 around year end and have an early close in December with the first close in H1 2027. On the back of continued strong performance for infrastructure, we see very promising fundraising dialogues. And finally, on the key funds, the fundraising for KIPP10 is expected to be launched early 2027. Across other closed-ended strategies, we're currently in the market with around 10 funds. We've already secured commitments of more than 3 billion euros for the Scale Up Europe fund, For ColorEQT, we've launched a fundraising for CCO3. The fund charges fees on invested capital and is yet to be activated.

23:35 And we've held the final close of the healthcare growth fund at 1.4 billion euros in line with the target. On the institutional open-ended side, the AI infrastructure reached an NAV of $11.5 billion at the end of Q3, an increase of more than $2 billion during the quarter. About half of it was related to strong value appreciation, and the rest was related to capital raised. All capital raised was used to sell down in EdgeConnex in Infra 4 and Infra 5. During the quarter, we activated our open-ended active core fund. The fund charges fees on NAV and contributed with around $0.7 billion to fee-paying AUM at activation.

24:27 As of Q3, just above 10% of our fee-paying AUM is now charged on NAV and hence growing with the performance, up from around 1% just 12 months ago. Lastly, our private wealth evergreens. I'll come back on these in a moment. I also want to explain a change in how we're going to present ColorEQT's fee-paying AUM from year-end. In contrast to the legacy EQT funds, ColorEQT funds stepped down in fee rate and not in capital base. To align the presentation of the fee-paying AUM across EQT, the step-down in fee rates will instead be reflected in the fee-generating AUM base going forward. On this basis, Kohler EQT's fee-paying AUM is 33 billion US dollars compared to the reported 38 billion euros as of the end of September.

25:28 And our previous guidance of 40 billion US dollars per year end is hence instead going to be 35 billion US dollars. Given the lower fee-paying AUM, the average fee rate will instead be higher as the management fees received are the same. So this is purely a technical change in order to align reporting. And in the appendix of this webcast presentation, you will find an illustrative case on how this is done. Next slide, please. So let me zoom in on the insurance side. This is one of the most interesting and fastest growing pools of capital in private markets.

26:17 Insurance capital is expected to grow by close to 10% annually to reach above 10 trillion US dollars by 2035. At the same time, insurance companies operate in highly regulated environment. And to participate at scale, you need fixed income exposure and strong structuring capabilities. On a standalone basis, EQT has been structurally limited in this area. Through Collar EQT, which brings deep insurance relationships and a dedicated team with in-house structuring expertise. Insurance clients account for close to 25% of Kohler-EQT's client commitments compared to less than 10% for EQT as a whole.

27:09 And since 2024, Kohler-EQT has raised almost 9 billion US dollars from insurance, including a 2.7 billion US structured product during the third quarter. This is a core growth area for Colorado EQT going forward, but also for EQT as a whole, given the possibility to create combined primary and secondary insurance solutions. Next slide, please. We continue to see strong inflow across the Evergreen platform. Interest has been particularly strong in our US-focused Evergreen infrastructure vehicle, which passed US$1 billion in NAV during the quarter after being launched in early 2026. This is a clear sign of continued strong investor demand for infrastructure exposure.

28:06 Q3 is a seasonally less active quarter given the summer holiday period. Net inflows still amounted to around 0.9 billion dollar euro during the quarter compared to 1 billion euro during Q2. Across those six months, September was the strongest single month. Redemptions is included in the net inflow and remained limited at around 1% of NAV during the quarter. And during Q3, we've also launched EQT Nexus Asia, a new Asia-focused private equity evergreen vehicle. And with that, I will hand over to Olof. Next slide, please.

28:54 Excellent. Thank you very much, Gustav. Let's next turn to investment and exit activity. So looking back over the past 12 months, we announced about €30 billion of fund investments across our global platform, of which €7 billion was in the third quarter of this year. Additionally, we provided about 12 billion euros of co-invest opportunities for our clients over the last 12 months, including 2 billion in Q3. Infrastructure represented a third of investments during the quarter as we continue to invest into areas enabling the AI infrastructure build-out, such as energy. On the private capital side, EKT 10 announced its final two investments, concluding the fund's investment period. And in real estate, we announced two large logistics portfolio acquisitions in Europe and in California. Turninging to exits, we announced about 3 billion euros of fund exits during the third quarter, which is typically a seasonally slower quarter. Thank you.

30:12 After the quarter, interestingly, Fort Knox announced a dividend recap in the first software recap in Europe in 2026. The refinancing comes 15 months post our acquisition of Fort Knox and since, strong performance and cash generation has driven rapid deleveraging. It shows that the capital markets activity is picking up across well-performing names across the software industry. Driving exit remains a top priority, and we have a number of companies and assets preparing for exits. However, as always, it's hard to predict when these events will eventually take place. The geopolitical backdrop and the recent increase in interest rates makes for a more selective environment for exits at the moment.

31:00 We've been one of the most active sponsors in the ECM market in recent years and we're planning for certain IPOs. However, the public market performance is concentrated and so is the IPO market at the moment. At the same time, we're encouraged to see strategic interest picking up for certain situations and As previously stated, we expect the AI Infra Fund to gradually increase its ownership in Edge Connects through additional purchases of shares following some purchases already this year. Next slide, please. Turning to performance, all of our key funds continue to perform on or above plan. During the third quarter, key fund valuations increased by 5%.

31:45 That follows broadly flat valuations in Q1 and a 5% increase in Q2. I'd say the Q3 performance was more broadly based than that we saw in Q2. Over the last 12 months, we saw double-digit value creation across private equity and infrastructure. The performance is paced by digital and energy infrastructure sub-sectors and EQT 10 seeing mid-teens value increase over the last 12 months. Earlier vintages, which do have a larger share of portfolio assets already realized, saw somewhat softer value development, increasing about 1% during the quarter. TURNING TO FUNDS IN VALUE CREATION MODE THESE FUNDS SHOWED OVERALL GOOD PERFORMANCE UP 5% DURING THE QUARTER AND 10% OF THE LAST 12 MONTHS THIS IS A STRONG RELATIVE PERFORMANCE CONSIDERING THESE VINTAGES HAVING BEEN PARTLY INVESTED IN A HIGH VALUATION ENVIRONMENT And following the closing of Kohler, KIPP9 is now part of our key funds and it's performing on plan.

32:52 The fund, as you know, is Kohler's EQT's latest private equity secondaries flagship with about $10 billion of fee generating commitments. So with that, let me hand it back to you, Gustav. Great. Thank you, Olof. So, let me say a few words on how we're using our balance sheet, which can be split into three distinct areas which we invest into. First, we have fund investments of around 1 billion euro. These are commitments alongside clients' indicative funds and will grow broadly in line with the AUM growth. The return of these investments comes from value development in the funds and cash materializes as the funds are distributing capital.

33:42 Then we have the strategic investments of around 2 billion euros comprising of the second and third area. We have the seed investments in the newly established closed-ended and evergreen strategies designed to accelerate growth for those strategies and enable early deployment. On the closed-ended side, EQT earns a capital charge and repayment is usually within six to 12 months. On the evergreen side, EQT earns returns based on the value development and repayment is usually within one to three years. And then lastly, the third area is the structured solutions offering for both insurance and institutional clients. For these structures, EQT will hold an equity portion over the lifetime of the structure and as such earn a return on that investment.

34:38 As mentioned during the Hoffyear announcement, a good proxy for the annual blended returns on our balance sheet investments should be at least 10%, reflecting the diversified product and vintage mix. And with that, I will hand it back to Olof to go through our revenue mix. Next slide, please. Thank you, Gustav. So our revenue mix is broadening not only as it relates to investment income, but we also expect fee-related performance revenues to ramp up. Before going into some details, please note that this is a quarterly announcement and the figures on the page in front of you are therefore the adjusted H126 figures and they do not include Color EQT. So starting with our fee-related revenues. The management fees, of course, make up the lion's share of revenues.

35:29 These are contractual, long-term, and recurring fees for which we receive cash on a semi-annual basis. With an increasing share of open-ended funds that Gustav talked about earlier, we will increasingly charge fees on the basis of NAV, allowing us to capture value appreciation, albeit at a lower fee rate. With more open-ended vehicles, we also expect to earn materially more fee-related performance revenues. These are earned on a recurring basis from funds charging fees on NAV, including the co-invest part of our evergreens, the AI infrastructure fund and the new active core infrastructure funds. These revenues do not require the realization of the underlying assets and are crystallized quarterly, annually, or every third year, depending on the fund structure. EQT either receives cash or shares in the product. In H1 alone, they were already nearly three times the 10 million euro we recorded for the full year 2025, and we expect them to scale with our open-ended offering.

36:42 As of the third quarter, we had about 20 billion euros of funds eligible for fee-related performance revenues. And in the appendix, we've included more details on how we earn these revenues. Secondly, transaction advisory and other fees are transaction-driven, and we expect them to remain largely stable at around the current levels. And moving over to carried interest in investment income. Investment income is, as just described by Gustav, driven by the fund performance and by the balance sheet investments. During H1, we recorded just over 200 million euros of investment income, which is more than we had in the full year of 25. And finally, carried interest, where growth will be driven by value creation and, importantly, exit activity. And as we discussed in our H1 update, we have four funds in carry mode with an expected 600 million euro of carry to be recognized over a multi-year period. And we have four funds expected to enter carry mode in the coming years. So with that, I'll turn it back to Per for some concluding remarks before we open up for Q&A.

37:57 Thank you, Olof. So to conclude, Our long-term approach to building the most attractive global client-centric platform in our industry continues to pay off. EQT is now the third largest private markets firm globally and the largest non-US firm by some distance. Fundraising momentum and deal flow remain strong really across our platform. The AI infrastructure fund launched in Q2 has already reached $11.5 billion of NAV. We see continued strong growth ahead for this strategy given the value creation potential of EdgeConnex. EdgeConnex is today the world's second largest developer of data center capacity, and we really see no signs of a material change when it comes to the demand supply imbalance for AI compute globally.

38:51 The ScaleUp Europe fund is off to an excellent start. Both deal flow and investor demand is above expectations. The fund has signed seven investments during the quarter, and we expect investment pacing to remain healthy. The investor demand for this fund is going to be significantly above the target fund size of 5 billion euros. Thanks to our strong fundraising momentum and post the closing of Kohler Capital, we now see us raising 140 billion euros in this cycle compared to 100 billion euros as previously communicated. We see attractive deal flow across strategies and we expect EKT 11 to be activated within the next few months and infrastructure seven to be activated around year end.

39:42 The acquisition of Stockbridge will further strengthen EKT Real Estate's presence in the U.S. and broaden our client offering to more thematic areas where we can create outperformance, for instance, within alternative living. During the quarter, we successfully closed the Collier Capital transaction, and the combination is off to an excellent start. Finally, we're pleased that we're also during the quarter established a presence in the Middle East. This is a part of the world where we see continued attractive growth and investment opportunities ahead for us. So with that, thank you all for joining us today. And now we'd like to open up for Q&A. Operator, please.

40:30 Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We are now going to take our first question. And this question comes from the line of Arnaud Giblat from BNP in Paribas. Please go ahead.

40:57 Thank you. Good morning. Two questions, please. If we could start with your acquisition of Stockbridge, I think you're talking about 15% to 20% growth to be expected. I'm just wondering how that feeds into the earnouts. I mean, clearly, there's a range of potential outcomes there that yield or not an earnout. So I'm just wondering if you could give us a bit of the parameters as to what level of growth needs to be achieved to achieve the full earnout or no earnout at all. That would be quite helpful. And my second question is on Infra4 and EQT9. You talked about potentially some exit prospects. Which of these are related to those two funds?

41:44 And particularly, if I focus and zoom in on Infra4, you also said during the call that there is an expected sell-down of edge connects from Infra4 and Infra5 into the AI Infra fund. So I'm just wondering at what pace that could go at, how we should expect that to impact DPI of Infra4. Thank you.

42:06 Thank you for those questions. I'll start with the question on exit outlook and maybe in particular also on Infra4. So as was mentioned during the call, we see continued resilient and good performance in our portfolio and encouraging value creation developments. What our focus is in this environment is making sure that we can continue to push value creation across all of our strategies, across the portfolio, and that we really make sure that our businesses are exit ready so that they can take advantage of the right exit window when it emerges. What we're also seeing is an increasing dialogue across a couple of our sectors with strategic buyers.

43:06 It's, of course, hard to say when these conversations will materialize and lead to transactions. We're also making sure that our businesses are prepared for IPOs when public market conditions are the right ones. When it comes to Infra4 and the sell-down of Edge Connects, we see excellent momentum in the business. We continue to see good value creation, strong value creation ahead for Edge Connects. And so on the back of that value creation, we expect interest in the AI infrastructure fund to remain very healthy.

43:54 And so depending, of course, on how much capital will be raised for this strategy going forward, that will then also dictate how quickly We will be able to reduce the exposure in infrastructure four, but then also over time in infrastructure five and infrastructure six to edge connects. But we are, yeah, we're very positive about the development and we see very good momentum and investor demand for this strategy. And with respect to Stockbridge and the earn out, I'll hand it over to Gustav who can elaborate on that. Thanks, Per. I would say, so the earnouts are, there are a couple of them, and they're not specifically related to the overall growth, but rather to the development of certain areas.

44:53 So you can't tie it specifically to an overall growth rate. But I think if you think about it in general, as we said, For 2027, we're expected to be between 35 to 45 million, so midpoint is 40. If you think about that from a 15 to 20% growth rate in the coming three years, i.e. to 2030, You get to somewhere around 70 million of fee-related EBTA in 2030. And I think in that scenario, I think you should assume that we would be paying out the full earn-out, which would then give us a purchase price of 550 and a multiple of around eight times.

45:48 Thank you. We are now going to move to our next question. And this question comes from Hubert Lam from Bank of America. Please go ahead.

46:01 Hi, good morning. Thanks for taking my questions. I've got two of them. Firstly, on EQT 11, I think you said you still expect it to be activated at around the year end. Can you talk about how fundraising so far has been in that fund? Should we expect the first close to be about half the target size? And do you still expect that fund to close in about two years? Or do you think it could take longer now? The second question is, again, on the exit outlook. I think previously you guided for about $19 billion of exits this year, which is the same as last year. But as of now, it feels like it's unlikely to achieve that. So can you talk about how this changes expectations around carry investment income? I think previously you said that you expect the H2 to be similar to the first half. I'm just wondering if that guidance has changed now. Thank you.

46:48 Thank you for those questions. I'll start with the one on EQT 11. So we held the first close this summer around 50% of the target fund size. Since then, also on the back of the excellent deal flow that we've had in fund 10, Thank you very much. Thank you very much.

48:01 After the first close that we held, we continued the fundraising over the next 12 to 18 months to, in the end, reach the hard cap. In terms of the exit outlook and carried interest recognition, maybe I'll leave that to Gustav and Olof to comment on. Maybe I start. I think as you say, I think the exit volumes year to date is around 10 billion euros. So I think as always with exits, same as with investments, they come in periods and it's not a straight line. So I think we'll need to wait and see where we end up on a full year basis. But But I think as we've also talked about, we have a setup now where we are generating carry and have generated carry from an IFRS perspective a lot in EQT 8 and Infra 3.

49:10 And there will be somewhat of a gap until we get to Infra 4 and EQT 9. So I think that is something that has timing effects on when the carry will be recognized. And then when it comes to the guidance on the investment income and carry, I would say that I think that the levels that we saw in H1 is probably the best proxy that we can give for H2 as well, both in terms of the absolute volume, but also to some extent probably the split between carry and investment income. Of course, especially given the strong performance that we've seen in Q3 on the investment side, that will have a positive effect also on the investment income side.

50:09 So I think that's the best proxy I can give right now.

50:14 Thank you. Thank you. We are now going to take our next question. And this one comes from the line of Ermin Kerik from DNB Carnegie. Please go ahead.

50:33 Good morning. Two questions from me, if I may. So, first on fundraising, could you give us any more color on the scale of funds, hard cap and your expectations for evergreen flows given the acceleration you saw in September? And then the second question would be on Stockbridge and long-term margins. So, clearly, it has lower fee rates and a lower free margin than EQT has overall. Do you still stand by the guidance you have for next year of reaching your target level on the FRE margin or will that now be delayed given that position? Thank you.

51:13 Thank you for those questions. I'll start with the fundraising-related question on the Scale Up Europe fund. So what we have communicated is that the investor demand is significantly above the 5 billion euros fund size target that we're seeing. We haven't set the hard cap yet, and so we don't want to provide or we cannot provide any further guidance on Thank you very much. Yes, so on the evergreen side, I think what I said in the H1 report where we had approximately two and a half billion of gross inflows.

52:23 And I said that's a good proxy for the second half of the year, but that you should expect a bit lower volumes in Q3 compared to Q4. I think that still holds. So as we said, we have 0.9 net inflows here. So the gross inflows is about 1.1 billion. So that would mean that you would need 1.4 in the second or in the fourth quarter. And Let's see if we get to exactly that amount, but I think we will be close enough for that guidance to be the right guidance. So I think that still holds. When it comes to the Stockbridge margins, they will have somewhat of an impact.

53:08 But I would say that given the strength that we're seeing in the business, given the positive effects that we will see from the fee-related performance fees, the previous guidance that we've given still holds for 2027. Thank you. We are now going to take our next question. And this one comes from Angeliki Baraktari from JP Morgan. Please go ahead.

53:47 Good morning, and thanks for taking my questions. Just a couple from me as well, please. First of all, with regards to your $140 billion fundraising ambition over the cycle, given that you have now brought on another $17 billion of fee-paying AUM with StockBridge and it sounds like you expect those assets to grow quite fast, Does the 140 billion fundraising include Stockbridge or should we expect something on top over the next three, four years? And second question with regards to the value appreciation in the AI infrastructure fund coming from EdgeConnex. It's a pretty big number this quarter, $1.1 billion.

54:33 I was just wondering what share of that comes from underlying earnings growth at EdgeConnect and what portion of that comes from potential multiple appreciation? Thank you.

54:47 Thank you for those questions. I'll start with your second question on EdgeConnect. So all of the value creation that we saw in the quarter relates to earnings growth and new business growth. And so we haven't made any changes in the multiple for EdgeConnect. And we continue to see excellent momentum for this investment also as we head into Q4. And look out into 2027. Gustav, do you want to comment on the point on fundraising guidance in this cycle post-Stockbridge? It does not include Stockbridge, so there is a bit of upside in it. But just to remember that it kind of...

55:38 For us, this fundraising cycle kind of ends with the launch of BPA10. So we're not talking about three, four years out. So in essence, it means that we have a bit shorter period of time. So I don't think that you should expect that Stockpitch in that period of time will add a material amount. We will, of course, not include a 16.5. So it's only net additions from that that we would include. But there is probably a couple of a couple of billion of upside from that acquisition in the time we have left in this cycle.

56:23 Thank you very much. Thank you. We are now going to take our next question. And this question comes from Magnus Andersson from ABG Sandro Collier. Please go ahead.

56:40 Yes, hi, good morning. Just first of all on margin as much of the new FOM coming in is from AI infrastructure, Evergreens, real estate and Coli Capital here. How do you see the average fee rate developing a few years out as the fees here are lower than in your buyout flagship funds? And then secondly, just coming back a bit to exits as your stock is unlikely to re-rate significantly before exits really get going. It's obviously been very weak also in Q3. So when do we have to see exits coming out of EQT 9 for your kind of guidance for 2028?

57:32 to hold. We've been waiting for quite a while for Infra 4 and EQT 9 without anything happening. And you pushed the guidance forward in connection with the H1 report, as we know, but just so that we have something to monitor, because the conviction about estimates here, expectations for 2028 is obviously still very low in the market, considering where you are trading.

57:58 Yeah, I'll start with a question on IKT9. So it's very much in line with the statement I made earlier. We're very focused on driving value creation also in this fund. We have... Thank you very much. Thank you very much. Thank you very much. We have stayed active, continuing to sell down.

58:59 We had to sell down an exit event in Bayref. And so we have a number of companies in IKT9 that we are preparing for an IPO. And then we also have investments where we are going to run an M&A process. And as I said, it's like a handful of companies that we're working on. Of course, it's incredibly hard to say exactly when we will be able to monetize these investments, but that's like the short-term pipeline, I would say.

59:38 to follow up then. A year ago you also talked about that from Q3 25 you should expect to pick up in exits in your infra funds which hasn't materialized either. What is the main, I mean, how should we think about that going forward if you disregard from EdgeConnex which we just talked about?

1:00:02 I think it's a similar picture in the infra funds where we have a number of companies where we actually have ongoing exit discussions in the infra fund. And then of course, we also have the investment in Edge Connects, where we monetize part of that investment during the quarter, right? I mean, the strategy is clear. We've raised the AI Infra Fund. We raised $900 million in the quarter for the AI Infra Fund, and all of those funds were used to reduce infrastructure four and five investments in EdgeConnex, and we expect to continue with those sell-downs going forward as well.

1:00:55 Thanks. And then maybe, Magnus, on your margin question, I would say that naturally, of course, with these strategies, as we've been clear on, you have a lower blended management fee rate. So that will have an impact over time. What I would say is that we don't foresee that it will have a negative impact on the overall fee-related EBTA margin because of course a lot of these strategies are less people dependent or at least require less people to run the strategies.

1:01:44 So we think from an overall fee-related EBTA perspective, we would expect that not to have a negative impact. Okay, thank you very much.

1:01:55 Maybe what I should add also, right, just to put things a little bit into context regarding EQT 9, the DPI right now is around 0.4, 0.5, which we actually believe is top quarter for the vintage of 2020. Okay. Thank you. Thank you. We will move to our next question. And this question comes from Russell Quelch from Morgan Stanley. Please go ahead.

1:02:30 Yeah, thank you for taking my questions. I wanted to focus on product opportunities in a few different areas. Firstly, in private credit, given you now have private credit capabilities again through the acquisition of Colour Capital. I wondered how you're thinking about the strategic case for expanding your presence there across that asset class. Could partnerships perhaps with insurance companies provide an attractive route to building scale there through access to permanent capital and long-curation capital? Or would you perhaps favor a more organic expansion? And maybe more broadly, how do you assess the relative attractiveness of entering that market today given increasing competition and spread compression, concerns around credit quality?

1:03:15 And second, just sort of in relation to that really, what gives you confidence that this is the right point in the cycle to expand into U.S. real estate? And then if I could squeeze a third in, just wondering what your thoughts are on expansion and timing into secondaries within the infrastructure space.

1:03:33 I can start to address some of these questions. in terms of private credit. Given the growth opportunity that we see ahead also in the insurance segment, we don't see a need for us to add a primary credit platform in order to be able to capture that opportunity. We're well set up with the capabilities that we now have access to thanks to joining forces with and I think it's really just a statement of strength that we've been able to reach this industry-leading position that we have, being now number three globally in terms of funds raised over the last five years, whilst really staying focused on this active ownership, alpha-focused asset categories and strategies where We can make a real difference as an investor and that has served us very well so far and that continues to be our strategy. As I spoke about earlier, we want to be the global provider of international alpha, the trusted and reliable partner for clients and investors.

1:04:57 I think the acquisition of Stockbridge just fits really nicely into that strategy. It's a very natural evolution of the journey that we've been on. Thank you very much. And what we're seeing is that this thematic investment approach that we have, the value creation capabilities that we bring to bear, and also the tools that we can use, the AI tools, the data analytics that we have, which our investors, our clients tell us is... Thank you very much.

1:06:00 We can really see the flows in terms of where data centers are being developed in the U.S. and then what that leads to in terms of warehouse demand. And actually 20 to 30% of leasing demand that we're seeing in our real estate portfolio comes from AI-related CapEx. And we want to bring all of those scale benefits that we have in our platform also to bear Thank you very much. This is just a very, very good fit for us.

1:06:49 Gustav, anything you want to elaborate on and maybe you want to talk a little bit about the secondaries, infra opportunity and next steps there? Yeah, and I think you covered it on the real estate side, so nothing more from my side there. I think on the infrasecondaries, this is a key opportunity for us. We're fully focused on building this leg of the business. Of course, now we're about 45 days from the closing, so it will take a little bit of time. As it always does, first of all, we need to have the right people in order to run this, and that's priority number one.

1:07:34 But we see that our right to win in this space is significant, so it is an area that we're very focused on.

1:07:47 Okay, great. Thanks, Jens. Thank you. We are now going to take our next question. And this question comes from Nicholas Herman from Citi. Please go ahead.

1:08:02 Yes, morning all. Thanks for the presentation. A couple from me as well, please. Firstly, on StockBridge, could you just give us some context to the 15 to 20% EBITDA CAGR that you've guided to? What assumptions have you made on open-ended inflows as well as closed ended upsizing and fund cycle duration. I ask because one of your European peers recently acquired a real estate manager and guided to 20 to 30% earnings CAGR. So I'm just trying to work out if it's low for you because you've been more conservative on assumptions, say. And then secondly, on SEF and private wealth, I saw that the SCF will feed into Nexus.

1:08:50 I can imagine that's going to be quite attractive for private wealth investors and distributors. At the same time, I also see that evergreen inflows have fallen for a couple of consecutive quarters. Could you just give us a sense of how gross inflows are trending and the momentum that you see in the build-out of your private wealth offering with distributors? And actually, if I could just take a very quick clarification, and by the way, the significantly larger fund size for the SEF, does that reflect more investments or larger investments versus the base case or target? Thank you.

1:09:31 I think two questions for you, Gustav, on the guidance for Stockbridge and the private wealth momentum. And I would say on Stockbridge, I think that I'm not going to go into specifics of the different components here. I think as we talked about, we see that there are a number of levers. You have the open-ended side. You have the alternative living side. You have the logistics side. And then, of course, we have platform synergies in this setup, so to speak. I think we feel comfortable around the 15% to 20%.

1:10:18 I wasn't part of doing the assumptions for Bridgepoint, which is the transaction I assume you relate to. So I don't know what they have assumed. I think if we can deliver 15% to 20% CAGR on a transaction where we're paying single-digit multiple, I think this is going to be a great deal for us. So I feel comfortable from that perspective. When it comes to the evergreen flows, as I said, I think we had a very strong Q1, as you've seen in the numbers. I think that if you would compare Q2 to Q3 without taking the seasonal effects of July and August being summer months, I would say that Q3 is stronger than Q2.

1:11:13 So I think that from that perspective, I think we're not in a downward trend, if that was kind of what you were referring to. I think when it comes to the Evergreen side, I think this is something where we're building this from more or less zero a couple of years back. And we think that this is going to be a strong growth engine for us going forward as we're adding new NAV and new AUM to the platform. And I think the pace that we're running at right now is, as I said, a good proxy of where we think this business should be able to generate on an annual basis.

1:12:00 So I think we see good momentum of the business. As I said, the infra side is stronger than the P side. But in general, I think we have good inflows across the board on that basis.

1:12:19 And regarding the final question on the scale-up Europe fund and the larger fund size target, so in terms of the... the targeted equity investments that the strategy is based on, that hasn't really changed. But of course, I would say the opportunity set is larger than we anticipated. The deal flow is of higher quality than we anticipated. And if you also then look at the number of unicorns that are being produced in Europe in 2026, Thank you very much. number of investments at the higher end of that range.

1:13:23 And that then also justifies a larger fund size that we will communicate in due course.

1:13:32 Got it. Helpful. Thank you so much. Thank you. We are now going to take our next question. And this question comes from Haley Tam from UBS. Please go ahead.

1:13:49 Good morning. I have a couple of follow-up questions, please. Firstly, on Stockbridge, could you just tell us how the 30% to 35% EBITDA margin compares to your existing real estate business? And you've mentioned platform synergies a few times. Can you confirm you expect to be able to lift the margin across the whole of real estate up towards the 55% to 65% target you have over time? And then a second question on AI Infra, also a follow-up to an earlier one. In terms of the value appreciation, you said the multiple you've applied is unchanged. I just wondered, do you incorporate volatility in public market valuations in your approach? And have you seen any impact on demand from investors in your fundraising as, again, public market sentiment has also been volatile? Thank you.

1:14:35 So we haven't seen a change in investor demand for the AI Infra Fund. EdgeConnex is really a unique asset. If you think about it, there's very, very few platforms that are truly global. EdgeConnex is one of the few 90 data centers globally, and really being able to add data center capacity across the US, Europe, and Asia, and then the quality also of the client base, the investor base, the counterparties that EdgeConnex has is really quite differentiated. The multiple that we have applied is, we think, appropriate. And if you just take, again, the earnings growth that we've seen in this investment over time into context, so far, I mean, we acquired the business in 2020. So six years ago, operating profit was around $100 million.

1:15:31 We think that the run rate is approaching four and a half to $5 billion by year end. And when it comes to the real estate margins, so I would say the following. I would say that the real estate business today has somewhat lower margin that we see on the overall business. I would say the main difference is the scale, so to speak, that the real estate business is operating on a somewhat smaller scale than we have, especially on the private capital and infrastructure side. So I think we have the ambition to bring up the margin for Stockbridge over time. I would not expect the real estate business to reach the same margin as we have on the firm wide in the short to medium term.

1:16:27 That's very clear. Thank you. Thank you. We are now going to take our next question. And this one comes from Julian Dobrowolski from ABN AMRO AutoBHF. Please go ahead.

1:16:44 Good morning, gentlemen, and thanks for taking my questions. I have also two follow-ups. The first one is on the EKT11 fund. I'm just wondering what's really holding back the activation? Is it fundraising or is it just EQT 10 deployment? I think this one sits at about 60% at the end of Q3, which is pretty much in line with Q2. And then what size is likely that we will actually activate in Q3? This one is really going to happen. And how to think about the catch-up fees in terms of the modeling? Just because I believe you'll continue, and you also said it today, that you'll continue fundraising for this fund over the next 12 months plus. And the second is, again, on the AI infra, just wondering quickly, what's the blended fee rate for this fund? I believe you said it's between 50 to 75 bps at Q2.

1:17:33 So just wondering where exactly do we see it within this range today? Thanks.

1:17:40 questions, I will leave the details to Gustav, but in terms of activation for ICT 11, What's driving the activation is really when this fund will be making its first investment. And since we haven't done that yet and just concluded actually the investment period for IKIT 10, that's why we haven't activated this strategy yet. So it's purely driven by that and by deal flow. And deal flow is attractive. We're working on a number of exciting and attractive projects And new investment opportunities in this strategy. So we will announce those hopefully if and when they materialize.

1:18:27 Gustav? Yeah. And maybe just so I think as we said, the plan is to activate it within the next few months and IE that it will be activated before year end of course we don't know if that's going to be the case as Per says it's dependent on doing this first deal in in equity equity 11 so I think that's that's that's a key parameter in it when you think about size at the activation I think as as we've We've said a number of times in the past, and we've said that we're about half the size of the target fund size at first close, which was during the summer, i.e. that would then imply 11.5 billion.

1:19:14 What you always see in these fundraisings is that after the first close, where you have the first close discount, you have a bit of period before new investors come in. So even if we feel that there is strong momentum in the fundraise, there's going to be a bit of time before we will see a significant increase in the level from the 11.5 that we kind of alluded to in the H1 report. So I think that that's a signal to where that we will be, of course, above that by year end. But I don't think that you should expect that we will be close to 20 billion in that number by year end. As we said, this is going to continue for the full year and that we expect that a lot of the demand is going to come in 2027 for the fund.

1:20:17 When it comes to the AI infra fund, As you said, what we said in H1 is that the fee range will be between 50 to 75 and that we were in the lower parts of that in H1 given the founder economics. So that means that On a relative basis now, we've increased that slightly, but it will take time before it will trend towards the 75, just given the dynamics of it. So I think what we said in H1 is probably still the right guidance to that as well. Okay, excellent. Well, I don't think there are any more questions on the line, so thank you, everybody, for joining today's call and, as always, available for any follow-ups after the call. Thank you, everyone.