EQT AB (publ) (EQT) Earnings Call Transcript & Summary

Welcome, everybody, to this call, and I wanted to introduce the team who's going to be on the call. First of all, here it's Christian Sinding. I'm the Managing Partner and CEO of EQT. Together with me on the line, I have Caspar Callerström, our COO; Kim Henriksson, our CFO; Åsa Riisberg, Head of Shareholder Relations; and Pawel, who is also a Director in Shareholder Relations. First of all, I wanted to start with hoping that all of you and your families are well and safe in these turbulent times. And our priority, similarly, and during this period is to ensure that all of our staff and all our families and our other stakeholders are staying safe and healthy. Operationally, we've decided since more than a week that all EQT employees across the offices in Europe, U.K. and the U.S. actually work from home as much as possible. And that means that the majority of EQT's offices are still operational but at a much smaller scale. Luckily, thanks to our strategy of future-proofing ourselves, we have an extremely modern digital setup and modern tools to work and collaborate remotely. And it actually works very, very well across the firm. We are completely cloud-based in all of our software solutions, and that means that people can work effectively from any device and any location. And today, that's obviously extremely helpful. Furthermore, we have very, very strict travel policies. Now there is basically no travel. And we, of course, encourage video conference meetings rather than physical meetings and also even rather than telephone meetings as we want people to engage with each other as much as possible by seeing each other live. This call is really intended to give you an update on EQT and our funds as well in light of the current market turbulence and the COVID-19 pandemic that we have now. So I'll start a little bit and then Caspar will come in, and Kim will round it off. So a little recap on EQT first. We are a purpose- and culture-driven private markets firm with really people at our core, and that's important in these times. More broadly, we have around EUR 40 billion in fee-generating assets under management, and these are mostly in private equity and infrastructure. We've been operating for 25 years. We've been through a number of cycles and crises before. We have about 700 people present in 19 different countries around the world. And we have -- our people are split basically 50% between those working with transactions, portfolio companies and clients, and 50% of our personnel are working to support, in the best possible way, our operations. Our market that we're operating in, the private market, is an attractive long-term market. It's expected to continue to grow for the longer term 10% per annum or more. And this is obviously generated by the performance that's driven -- that we drive in our investments and that we provide to our clients. And we've generated around 20% net IRR since our inception and around 2.5x multiple investment costs. Our vision is to be the most reputable investor and owner, and that's even more true and more important in today's really volatile market. And we do invest for the long term, and we want to act as a responsible owner in both good and bad times. So with that as a backdrop, I wanted to share a few observations on the current market environment. Our funds portfolio is fairly robust. The composition of our funds is a reflection of the thematic investments that we've been pursuing for a long time. We have a focus on noncyclical companies driven by long-term macro trends, long-term secular trends such as the continued digitalization of our society, demographics, lifestyle and even regulatory trends, the trends that are not necessarily connected to the economic cycle. And if I look at the Private Equity side, the equity portfolio and our equity funds is focused on the preferred sectors of health care, TMT and services. That's roughly 90% of the capital in those 3 sectors. When I look at our Infrastructure portfolio, around 50% of the capital is in fiber infrastructure. And all of the companies there are providing essential services to society. When it comes to leverage, we have been structuring our new deals over the past years with a range of anywhere between 3x and 7x EBITDA. Typically, we don't max out leverage. We typically don't use holdco PIK notes, et cetera, and we typically don't continuously leverage our companies to take smaller dividends. This means that we have somewhat more conservative capital structures than most. Even in some companies, we have no leverage if they are growing very rapidly. And if you look at our overall financing structures, we have about 75% of them are in covenant-light structures. And those where we do have covenants, those are mostly in the Nordic region with relationship banks, where we have a really good overview and very good cooperation with our relationship banks. Now in addition, over the past 24 months or so, we've been talking about the storm is going to come at some point in time. And that means that we've prepared for a downturn for a long time, and we've actually refinanced a large part of the portfolio with moving covenants and pushing out maturities. We've also pushed out -- yes, sorry, pushed out maturities. We have -- also for some companies now, we have drawn down the revolver to be prepared for a more complicated time. But as I'll get back to you and so will Caspar, we don't see a need for that in all of our portfolio companies. And we really work on a portfolio company by portfolio company basis together with our financing providers. And basically, we have 3 different types of companies that are affected by the crisis in different ways. First, we have those that are temporarily impacted. And this is where the underlying trends in the sector are still intact, and they'll have a temporary hit, but the companies will actually recover forgone profits. The second category is temporary but lasting impact, where the underlying trends are still intact. There'll be a temporary hit, but the companies will not recover their foregone profits. And the third element is the ones that have a structural impact, where there are structural changes to demand in that sector that are accelerated by the crisis and where the underlying trends actually don't come back to a real positive future. Those that are most affected in the final category are right now -- well, actually, this is a slightly separate point, but the most affected sectors right now short term are, of course, travel and leisure, oil and gas and retail. And those sectors consist -- are in total, less than 10% of our total portfolio across the EQT funds. This is another way to describe why the line part of our portfolio is robust for the long term. Furthermore, with what we currently know, we will need significantly less than 5% of our total fund capital to support the companies in the equity and infrastructure portfolios. So that means that with our level of invested capital today, we have plenty of dry powder to support our businesses. Furthermore, we have the people, the resources and the talent to work with our portfolio companies and to look at new transactions, as Caspar will come back to. And we have a large network of senior advisers that work with all of our portfolio companies around the world. We have very strong, professional Boards with industry specialists and the very strong management teams. And everyone around us is, of course, helping to handle this current challenging situation in the economy. So with that introduction, I'd actually hand over to Caspar, who will continue and talk about some other elements.

Okay. Thank you, Chris. And I think we have obviously tried to learn a lot from the previous crisis and mainly the financial crisis. We -- as Chris alluded to, we have, in the past 2 years, worked quite a bit on the portfolio side to put plans in place or to put plans in drawers, you can say, in all our portfolio companies. And those are the downturn plans that are now taken out from the drawer being actioned upon. And I think our experience from historical crises is that action is of essence and that you move quickly and take decisions. And therefore, it's essential to have -- not to be forced to haggle about what you should do, but everybody knows that it's just execution. And I think -- so the portfolio companies as well as our staff has sort of been mentally prepared for a downturn. On the deployment or investment pace, I think it's pretty clear that the pace will be impacted, especially in the short term. We expect that the current market turbulence today will lead a postponement or a significant slowdown in bids. For how long this will last, it's hard to predict. We will see. But right now, the market for financing new deals is more or less closed. However, as we saw in 2008 as well, this new environment can also open up for new opportunities. But that said, the main focus right now at the moment is on the current portfolio. On dry powder, key funds are 70% to 75% invested, which means we have capital to support our companies as well as capturing any new opportunities that may arise in the current situation. This will also impact our exits. As we said in the Q4 call, our exits are tilted to the second half of this year. So we're continuing with exit preparation, but the market obviously needs to recover for these exits to happen. And time will tell. But that said, we have a young portfolio. Our oldest portfolio company is roughly 8 years old in our portfolio and that is Anticimex, which is also one of our stars and strong performers. So we have no pressure whatsoever on us from our investors or legally or anything else to be selling any assets. So we can sit on the assets for quite some time before we come into any sort of problems in that area for years. We also -- a reminder to you, we don't have sort of open-ended funds. I mean these are closed-end funds, so we don't have any outflows or anything like that. Our funds' capital is committed for 10-plus years, which means that we would rather wait for a market recovery and generate returns and carry than to sell at a low valuation. On the fundraising side, as you've seen, we announced last night or this morning, depending how you see it, the hard cap on EQT IX at EUR 15 billion. This we -- you should have anticipated. We talked about that in January. And what this means is that we have now then communicated to our LPs, our investors in the funds that the maximum amount of commitments that are going to be accepted in EQT IX is then EUR 15 billion. And as usual, this is basically the only thing we are allowed to say specifically about the fundraising of EQT IX. But what we can say is, of course, fundraising in general will certainly take longer time in this environment than it would in the environment we had 3 months ago. So I think with those words, I'll hand over to Kim, our CFO.

Thank you. Thank you, Caspar. I'd like to spend a little bit of time and say a few words on how all of this will affect EQT AB. And let's start with a reminder on our financial model, how it works. So we have 2 kinds of revenues. We have management fees, and we have carried interest and the investment income. And the management fee, which is the vast majority of our revenues, firstly, it's calculated on committed capital in the funds that are in the investment phase, and then it's on invested capital in the post-investment period in the older funds. So at no point are the revenues based on market values in those funds. It's also worth mentioning that our fund investors have never defaulted on a capital call during our 25-year history, so that is not something we expect to happen. The second part of our revenue stream is carried interest. And under IFRS, carry recognition will require an underlying positive development in the fund valuations and/or an exit of portfolio companies. And it's too early to quantify at this point. But if this turmoil continues, it will have an impact on the timing of carried interest recognition. So carry recognition may be delayed but not canceled, as also Caspar alluded to, that this is very important that we are focused on the -- not the IRRs but the money multiples instead. On the valuation side, we have a very structured quarterly process for valuation of our portfolio companies. The quarter has not yet closed, so the valuation process is not yet finalized. So no further comments on that at this point in time. Together with carry, we also report investment income. It's a very small part of our earnings or revenue for now, but that is based on mark-to-market methodology, so may be impacted more directly by the market turmoil. We currently have invested roughly EUR 70 million out of our balance sheet or -- as of year-end. As you know, our cost base is largely our employees, and our long-term plans to grow the firm, obviously, remains. However, the practicalities around hiring is likely to impact the hiring speed, where people work from home and do not have the possibility to meet in person. So our growth in people is likely to slow down from what we had expected. This is not going to impact immediately because people commencing in the next few months have already been hired by now. So this is a slightly longer-term potential impact. We will also have lower travel costs for a while as people work from home. That's on the cost side. As you remember, we did announce a review, strategic review of our Credit segment in January. There are no change to those plans. As we have communicated earlier, we will revert before the summer then with the outcome and conclusions of such strategic review, and that is still the case. And finally, we -- as there is a very much focus on liquidity and balance sheet strength, worth noting that with relation to EQT AB, we have a very strong balance sheet and a very strong liquidity position with, at year-end, approximately EUR 900 million in cash. And with that, I'd like to hand back to Chris for some concluding remarks.

Thank you, both, and thank you, everyone, for listening in. Please stay safe out there, and let's hope that we all get through this difficult situation as soon as possible. With that overview, we are then open for any questions that the audience might have.

[Operator Instructions] And our first question comes from the line of Peter Kessiakoff from SEB.

Just a few questions. The first one is on perhaps the ability to invest in this environment. And that, of course, relates to the fundraising of EQT IX. Given where markets are today, I mean, would you -- and let's assume that this is -- this continues for throughout the year. Do you think that there's any ability of you to invest capital further within these funds? Or are the markets pretty much closed, meaning that, of course, the fundraising of EQT IX would be something that comes into 2021? That's my first question.

Okay, I'll take that one. It's, of course, right now in the middle of the crisis and when there's so much uncertainty, it's hard for sellers and buyers to meet. That's just the reality. For midsized transactions, we're actually not dependent on the financing markets because then we can use our own equity capital. So we have the possibility to do transactions, and we are working on a number. And there are interesting opportunities out there like certain public companies that could be interesting that certain sellers that are maybe even more distressed or would like to refocus their resources. So we're actively looking. And of course, as you know, we follow the investments that we're making. We typically follow the companies and the sectors for years. So it's hard to say exactly how many investments we're going to be able to do in this marketplace. We, of course, hope that once things stabilize, what our experience was from the last crisis was that when things stabilize, then actually sellers and buyers can meet, and you can start to transact. When it's as volatile as now, I would say it's relatively unlikely, but there might be 1 or 2 situations that are possible to convert. And when it comes then to the fundraising, the fundraising itself, of course, is one process. And Caspar can talk a bit more about that, if you like. But the -- of course, we're not activating the new fund until the previous funds are fully invested, and they're typically fully invested between 80% and 90%. So those are the 2 equations. And right now, I can't tell you exactly what the timing of that will be.

And perhaps if...

Caspar, do you want to add anything? No, go ahead, Peter.

No, I think you covered it well. Yes.

Just if I -- just a follow-up on that question. In terms of valuation levels, given where kind of if you take equity markets as a proxy for how valuations perhaps within your portfolio has developed, are the valuation levels any issue in terms of getting buyers and sellers to meet and perhaps for you to sell or exit companies and, thereby, generate carried interest to the level where you would be satisfied, and that is in line with your -- with the targets that you've set out for your funds?

Yes. When it comes to exits, the same thing applies. When there's a huge amount of uncertainty as of right now, then we're unlikely to execute on any exits just because it's -- we're not under pressure, as Caspar said, to sell, and we want to make sure that we deliver the best possible long-term returns for our investors. And we're quite comfortable with our overall portfolio as you heard. So again, we need some kind of market stability for exits to happen. And of course, you can -- and when that happens, you can exit those companies that are in very healthy sectors and are performing in a strong way. And those that have been more affected there, we're going to have to continue to work with them and keep them for the longer term. And Caspar might want to make a comment on the valuation.

Yes, I think -- I don't think it's -- I mean, the stock market is maybe not the perfect proxy, to be quite honest. And the reason for that is, of course, if I play with the thought that we would launch a public tender for a company today, would we be able to buy that company with a 30% premium? And I would say probably not. So the price of an entire company is something different than a price for marginal share. So of course, the price of a full company is affected but not to the same extent as a marginal share, I would say. So maybe a bit theoretical, but I think it's actually true also in practice. So -- and that is also why it's a little bit difficult to meet with the buyers and sellers when you have this high turmoil and high uncertainty. And as things calm down, you typically find where the correct price, clearing price in that market is.

Okay. And then just perhaps a final question. In terms of the hard cap, which is very close to the target AUM, when looking at previous fundraising cycles for you and if we, I guess, go back to EQT VIII and maybe VII as well, the raised amount of capital was a few billion euros above the target that you set out. Should we -- how should we view the hard cap that is now set? Is it a reflection of that? Perhaps in these volatile times, it's difficult to raise much more capital than the target, and perhaps just achieving the target is good enough? Or is it that perhaps the size of the funds are becoming so large now that you don't really want to take in more capital because in the end, you need to generate returns on that money as well?

Yes, your questions are good, but it's -- you can't really extrapolate the past because every fund raise and every market situation is different. The way I think about it is that we set a target here, which we were happy with and which we think fits our investable set of companies and which we think we can deliver an excellent return around over the long term. And now we set the hard cap slightly above that. I think what you also should look at is, and I think as we indicated before, you should also look at the increase in size and absolute numbers from fund to fund. And the percentage of increases are one thing, the absolute increases are another. But I think the way we -- we are -- I think we are quite happy with ending up at the hard cap. And that's what we're going to be working on for the foreseeable future.

Our next question comes from the line of Magnus Andersson from ABG.

If I could just follow up a bit on the fundraising. Caspar, you mentioned that, obviously, the fundraising of EQT IX now could take -- most likely it would take longer than it otherwise would have done. Can you tell us something also about the potential size and fee pressure? Are you already now feeling that clients that are hit by public equities are becoming overexposed and therefore, by that demand for alternative investments, are going down and that we potentially, therefore, could end up below the EUR 15 billion? And also anything on negotiations, say, on terms, what would it take for clients to start to become more aggressive on management fees, hurdle rates, et cetera? Are we there yet? Or...

I think I can start answering and, Chris, if you fill in if you want to. I think when it comes to the size of the fundraising, I think we just went out with a hard cap, and that is what we're striving to achieve. So that is it. I think when you talk a little bit about the allocations to PE in general, it's something that you could see a little bit in the financial crisis, which is called the denominator effect. So meaning that if you have significant movement in stock prices, you become "over-allocated" to a little bit less price-sensitive private markets. And therefore, we -- it was a tougher time. I don't think we're at that point now. Of course, if this continues with another 30% down, then it's a different story, but we're not there now, not that we can see, anyway. And I don't think it's the allocations to -- I mean, our investors, they are very professional. They're very long term. They don't change strategy from one month to another. So they typically have a target allocation that they're working towards in good times and in bad, but it's not sort of -- a blip in the curve will not change that. I would say how much and how deep this downturn will go, anyone's guess.

And the same goes for fees then, I guess. If you're not worried about size, you're probably not worried about fees either.

I think we said that we are going out with fundraising on substantially the same terms as the last fund. And I think we'll stick to that wording, and that's what we believe.

Our next question comes from the line of Arnaud Giblat from Exane.

I've got a couple of quick questions. So firstly, on the mechanics of fundraising. So you've got several closings. And I think it's at the point of the first close, which makes reference and any further closings thereafter are subject to late fees, is that right? So I mean, I suppose the key milestone we're looking for is the first closing. That's my first question. And secondly, a couple of months ago, you were talking about bridge financing for solutions to raise more capital until the next infrastructure fund is raised. Does that still remain valid in this environment? And are we looking roughly to 2021 now? Which quarter in '21 could you foresee the raising of infrastructure fund size?

Thanks. I'll answer the last question and then Caspar can comment on the first one. With regards to the bridge, which we call up a parallel investment vehicle, the PIV, that process is ongoing. And it's also a fundraising process, so I can't comment on it other than to say that it's ongoing. And it probably also -- the general statements we're making probably also or definitely also apply that all fundraising will now take a little bit longer, both for -- both because of the status of the financial markets, but also just practically in the way that everybody has to work now is obviously over digital solutions, et cetera. And therefore, I also won't make a prognosis as to the timing of the next infrastructure fund. It's 70% to 75% invested, the current one. And we typically close funds somewhere between 80% and 90%. And so when that is done, we've typically started fundraising by that time period. But to give a prognosis right now of any timing would be, I think, yes, it's not possible. And I think we've given you kind of the dynamics around it. Caspar, do you want to take the mechanics of the fund raise?

Yes, sure. No, I think you're right. So basically, the late fees are from the first close and onwards.

Our next question comes from the line of Liz Miliatis from Bank of America.

A few questions, firstly, on the EQT fund line. On the first close, I'm not sure if you're allowed to mention it or not, but have we actually had the first close? The second question would be, given the current environment, would you be interested in potentially looking at a distressed fund, and raising a fund in that sort of strategy? And then finally, Kim, you mentioned that there may be a slowdown in staff hiring for this year. I think we've hired 400 FTEs for 2020. Are you able to give us approximation of will it be 70 or 80 people or what that number might look like for 2020 and even 2021?

Thanks. Regarding the fundraising, we're just not at liberty to say because of -- primarily because of American securities marketing rules. So I don't think I can -- I don't think I'll be able to help you there, unfortunately. On the third question, Kim will step in. On the second one, we have 2 ways of investing in either distressed securities or distressed structures or in companies that have a distressed balance sheet, one is through our Private Equity and Infrastructure funds. We have the capability there to buy companies that are in distress, but those strategies would focus on companies that are -- where the company is actually healthy, but the balance sheet is struggling, rather than actual looking for turnaround or distressed companies, which we -- which is not kind of EQT's core strategy in any sense. We do, however, have a credit fund, Credit Opportunities III, which is investing in distressed securities and also has the ability to do loan-to-own type of strategies. And they're, of course, very active in the market right now.

So Kim here and a comment on your third question there. So as I mentioned for H1, the change in hiring speed will really not have any significant effect because those are already signed up, and it's more a question of when do they start. And then after that, it's anybody's guess how long this will last. But if we are back to normal soon thereafter, I would not expect a big change to the earlier communicated pace. And if this continues throughout the year, then the hiring pace will be significantly slower, I would say, in the latter part of the year as well. So anybody's guess, I'm afraid.

Okay. Can I ask just one more question? I suppose the Credit business is still under review, but is your -- is the review potentially going to be changed due to the current environment? Or is your view of that Credit business, has that changed due to the current environment?

No, there has been no changes to the review or the process that we are discussing there. That's all underway as planned.

Yes, thanks, Kim. I was on mute. So I agree.

Our next question comes from the line of Per Jørgensen from I&T Asset Management.

This slowdown has come very quickly and very much abrupt. If you look at your experience from former crisis, do you expect to see any catch-up effect in either selling or buying companies? That's my first question. My second question is on the pipeline management. Do you see any reason for changing that? Do you see an acceleration in looking at companies, so you can act maybe more promptly when the Fund IX has been launched? That's my second question. My third question is, actually, you have mentioned before that 2020 should be seen more as an exit year due to valuations and all that. And now the market has suddenly turned. Do you see a more aggressive buying later this year?

Yes, thank you. Good question. With regards to the catch-up effect, of course, nobody knows exactly how and when the economies will come back, but they certainly will. And like you heard, our portfolio is skewed towards what we believe are the -- are healthy long-term trends. So yes, typically after a period of time where there's been very little happening, I would expect that there's some activity, but I think it will be -- it will probably be very spread out according to different regions and different sectors. So in some sectors, I think activity will come back quickly. In other sectors, it will take longer. That's at least the experience that we've had from other crises, and hangs together with your next question, the pipeline management, the way we work is we work kind of on the access of local with locals and thematic investing, sector-based investing on the other one. So where those 2 meet, we're following companies for a long time. I don't remember exactly the number, but if I remember right from EQT VIII, EQT VII, I think we've been following those companies for an average of 4 to 5 years before we actually invested in them. And that means that our pipeline management continues irregardless of the cycle. And then we're -- what we have to do, of course, though, is the -- when there are things that are uncertain as now, we have to be extremely selective for the reasons we discussed earlier. And then on the third question on the exit year, the -- yes, I think Caspar also mentioned it in his overview, we are not under any pressure to sell, and we think it's very difficult to sell any assets in this environment. So -- and that's probably going to take some time before everything comes back. So I would expect exits to be -- exits are -- what we said in Q4, I think was that exits will push back into the second half, and that might be further pushed. There will be fewer exits later.

Yes. Okay. Just on the fundraising, I know it's not a topic that you want to discuss too much. But are there any changes in the dynamics? Because a lot of clients coming into the EQT IX, they know you from the VII or VI and so on. So is it -- not to say that it's easy to do fundraising, but the clients know you, so you don't need to meet up in person and so on. Is it a way to get the fundraising done and the reason that you actually today send out a message about the hard cap? Are there any changed dynamics as you see it?

Changed -- well, I think the changed dynamic is that the overall fundraising process will take some more time both because of the disruption that's happening in the markets and because of the practicalities. Now we started our fundraising of EQT IX in January. So of course, quite a lot of work has already been done. But I don't think I can comment much more than that. Let's see if any of my colleagues want to add anything.

No, I think it's difficult to say much more because of regulation, we cannot comment on the economics of fundraising.

No, no. Fair enough. It was not to get a feeling about that. It was just the dynamics. That was what I'm after.

Yes. And of course, it is...

I mean I think...

Go ahead, Caspar.

Yes, to answer your sort of broad questions, I think what we see is, of course, that the vast majority of the investors in the fund typically are coming from an earlier fund investment. So a re-up, as we call it, in our lingo. And I would say that would be valid for all our flagship fundraising. So that's probably more than a majority -- a vast majority of the money is coming from old relations.

Our next question comes from the line of Gurjit Kambo from JPMorgan.

Just a couple of questions. Firstly, in terms of the business now, are there any sort of significant differences between 2009, obviously, you weren't listed then, in terms of either the size of the companies you're investing, perhaps the mix? Just to give us a sense of maybe where there any funds that missed the targets last time? That's the sort of first question. Secondly, just on the secondary market because I suspect there'll be quite a lot of opportunities where other managers or investors are lacking liquidity, which may create opportunities for something like EQT. You have clearly more firepower. So what are you thinking about that? And then just finally, just Kim, for yourself, is there any part of the portfolio or the balance sheet where there could be any sort of even small mark-to-market adjustments that we need to factor into our numbers?

Okay. I'll take the first 2, and then Caspar can take the third one. Thanks for joining today, Gurjit. The -- I think the main difference between the previous cycle or before the great financial crisis and now is that we are -- since the financial crisis, we've actually been investing thematically, as you heard us talk a lot about, which means that we've worked to avoid cyclical exposures. We've worked to avoid highly capital-intensive industries. And we've tried to find investable trends, which are not related to the economic cycle so much but rather other trends. And therefore, we have investments in a lot of fiber and broadband. We have veterinary care, and we have a number of health care companies, pharma, medtech, et cetera. So that I think is a big difference. If you look at our portfolio 15 years ago, we had a broader spread where we also had building products and other types of companies that had more cyclicality and more capital intensity. So that's it. And -- but even so, the main fund, the flagship fund that was invested mostly before the financial crisis happened was EQT V, and EQT V delivered 2x MOC. So that was an '06 vintage, which they also called the vintage of death in private equity. And in that vintage, we delivered the top quartile return of 2x. And sorry, on the secondary market, the -- definitely, and there are -- we are -- but we're working the same way. We're working thematically and locally together. And we're talking to a lot of different sellers these days, and we want to be as well positioned as we can to make those kinds of transactions happen. That was your question?

Yes, that's great.

Yes.

And to answer the mark -- yes, the mark-to-market adjustments, and I think we have -- according to IFRS, financial investments, you are valuing on a mark-to-market. We have, at year-end, roughly EUR 70 million on our balance sheet in financial investments, i.e., investment in our funds. Maybe that's slightly more in Q1, but that's sort of the basis on which you will see mark-to-market adjustments in the Q1 that we will see that.

[Operator Instructions] Our next question comes from the line of Mike Werner from UBS.

Most of my questions have been asked, but I do have one additional. I guess in previous private equity funds, EQT VII, VIII and maybe even going back to VI, I was just wondering what the breakdown was in terms of existing clients versus new clients, i.e., what percent of the committed capital came from clients from your predecessor funds? And what percent were essentially new clients to EQT at the time? And I guess, as a potential follow-up, what are you targeting? Or are you targeting kind of a specific mix for EQT IX?

Yes. Caspar, do you want to take that one? Because we -- I don't know exactly what we disclosed and not disclosed.

Yes, I can take because I know what we disclosed. In the press release of EQT VIII, we said that -- knew that we had existing investors with coming from 70% in the equity fund previous -- the previous equity fund, EQT VII, that is. So 70% was old money, you can say.

Yes. And I think in Infra, it was 80% something, 85%, I believe, the number was in Infra IV. That gives you kind of a range to work with.

That's helpful.

And with regards to the target mix, it doesn't -- it's not really -- it doesn't really work that way. What we're -- what we, of course, try to do is keep excellent relationships with our existing LPs and, over time, also bring in new LPs that we think are a good fit for us and for them as we grow and develop. So we don't really think about it in terms of a target mix.

And as there are no further questions registered at the moment, I will hand the word back to our speakers for final comments. Please go ahead.

Thank you. Thank you, everyone, for joining on short notice. We appreciate it, and we look forward to staying in touch. Have a great day, and stay safe out there. Thank you.