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

Good morning, everyone, and welcome to the presentation of EQT's full year results. 2024 was a record year of investment volumes, increasing exit activity and strong value creation for EQT. It was also a year of continued headwinds for the global fundraising market yet one where EQT closed the largest private equity fund globally for the year. And we continued to build our distribution channels, including our private wealth initiatives. Today, we will reflect on our priorities for 2025 and the future of private markets. With those words, let me hand over to Christian. Next slide, please.

Thanks, Olof. Good morning, everyone, from Davos. I've spent the week here. And actually, I'm quite encouraged by the positive business outlook shared by most everyone that I've met during the conference. Of course, there are also longer-term questions regarding geopolitics, inflation, decarbonization and AI that we and other investors are considering when investing capital and managing companies. But EQT, of course, does that in line with our thematic approach. And looking at EQT, our global portfolio is developing quite well with double-digit EBITDA growth across sectors and regions. In 2024, EQT made progress in some key areas. We delivered a value uplift in the funds of 18%. We had a record year for investments as we executed on a strong pipeline across North America, Europe and Asia. We delivered on our objective to drive exits. And volumes were up 70% with approximately 30 exit events across our key funds alone. We launched 2 investment strategies across health care growth and transition infrastructure, and we now have 2 active vehicles for private wealth where of EQRT, our U.S. REIT, just started raising capital. And we have another 3 private vehicles underway this year. Overall, we're entering 2025 optimistic about the deal environment, although, of course, humble about the world conditions. And we expect high exit activity and high deal activity for the year with more than 30 exit events planned. Next slide. So taking a step back, I see 5 forces that is going to drive -- that are going to drive the growth opportunity and shape our industry over the next decade. First, a larger share of value creation is taking place in private markets. Yes, public market performance was strong recently, but this, as we all know, was concentrated highly to 7 U.S. stocks. And in fact, only 15% of companies in the U.S. with revenues over $100 million are now publicly traded, and the number of IPOs that we talked about has steadily come down. And during this period, private markets have outperformed the public markets across almost all time frames. So private markets are needed not just to generate returns, but actually also diversification and that's why both institutions and individuals are attracted to our asset classes. Second, the investment opportunity in private markets is vast. Beyond private equity sectors, such as health care, software, services, et cetera, active owners like EQT are driving the digitalization of society, the decarbonization of our economies and building future infrastructure. In fact, McKinsey estimates that approximately $275 trillion will be spent on physical assets in the transition to a decarbonized economy just until 2050. And to do that, we need a lot of capital. We also need superb cooperation between business and government across the world to make it happen. At EQT, we do have one of the largest global deal-sourcing machines in the industry, and that's built to capture those opportunities. And some recent ones include EdgeConneX, which is one of the largest data center providers in the world, or transition-related investments such as InstaVolt or Statera in the U.K. Third, private markets are expected to double by 2030 and double again by 2040. The growth until 2040 is expected to be paced by something like $8 billion to $10 trillion in private wealth, $7 billion to $8 trillion in sovereign wealth funds and $3 trillion to $5 trillion in pension funds. And as expected, as we talked about before, capital is increasingly concentrated with the larger managers. So the buyout category, actually, over the last 3 years, the number of buyout funds has decreased and actually dramatically more in venture capital. And on the other side, the top 10 funds in the world in the first half of 2024 accounted for 65% of capital raised. So as a result, we believe our industry will continue to consolidate and EQT will continue to be active in bringing together strong teams into EQT and to our platforms. Fourth, the world is facing rapid technological shifts and climate and geopolitical risks. As we all know, the rise of AI is transforming industries and companies and has the potential to create tremendous value and is already doing that. At EQT, with our Motherbrain team, we're going after opportunities both for efficiencies and costs, et cetera, but also to drive revenues across our entire portfolio sector by sector, and of course, starting there with tech, as we talked about before. Furthermore, we do also build climate resilience into the strategy of our portfolio companies. And we do that by setting Science Based Targets for every single company and building that in the strategy of the business. And today, 52 of our companies have set their net zero strategies, which means more than 60% of our invested capital. And this creates both resilience for the future and we believe is going to make those companies more valuable. Overall, the key focus this year is -- at EQT and our portfolio is on future proofing and driving performance there. That's how we create fundamental value by making companies better and stronger. And we're also then refining our value-creation playbook sector by sector, bringing in new talent to our industrial advisory network and making sure that they really help guide and challenge our management teams to perform at their best. Finally, the liquidity and ownership model in private markets is evolving. And we're assessing and working with new areas for our clients in terms of liquidity solutions, more bespoke investment strategies, continuation vehicles, private IPOs, which we are working on in NORD and GP-led secondaries. Next slide, please. 2024 showed the strength of EQT's global platform with these 2 axes of being local with locals on the one hand and a thematic investment approach on the other hand. And even if GDP growth in Europe has been slower than the rest of the world, our companies and assets here are performing quite well. So our approach has enabled us to invest in long-term themes, outpacing GDP such as health and well-being, the energy transition, education. And actually, around 90% of our portfolio companies in Europe expect double-digit EBITDA growth over the next year. There's a lot of discussion these days about European competitiveness, we agree with that. We are also engaging with all the stakeholders around those questions. But in the meantime, what's interesting is that this means that EQT can find global leaders in Europe at more attractive valuations than in other regions, particularly the U.S. And therefore, we've been able to buy companies and take them private for like Dechra animal health. So there is some silver lining in these questions. Now 1/3 of our invested capital is in North America, and the sentiment there, as we all know, is quite strong for the coming period. And we also have solid performance in Asia. For example, our India team has excellent deal flow. That's our largest program in Asia, about 30% of the Private Equity fund in Asia. And also value creation is very strong. Our Japan team is also very active with plenty of new deals, and we've strengthened our team there with the addition of Tasuku Kuwabara, who will be leading our infra efforts in Japan after a long career of heading up McKinsey in the country. Now across America and Asia, 3/4 of our portfolio of companies project double-digit EBITDA growth there in 2025. Looking across to the next slide, you'll see the value, I believe, in key funds in 2024 was 18% with Q4 being our strongest quarter in 3 years. And this is driven by several factors: healthy underlying performance, as you heard, with solid trends on sales and EBITDA, exits or exit processes with good valuation indications and also reference multiples being more supportive in our sectors. Furthermore, now 5 of our 10 key funds are expected to perform above plan and we just upgraded our expectations for BPEA VIII to perform above plan. Again, back to the strong performance in Asia. And a number of companies in that portfolio are actually performing ahead of the underwriting. And we've already had a first liquidity event, the IPO of Sagility in India, which is actually up more than 50% since listing. So next slide. So of the more than 30 exit actions last year, we've executed a number of large exits with solid returns for both our clients and our funds and also new investors in those stocks. And this has been a quite important focus for us as we own a number of leaders in industries across the world. And I have a couple of examples for you. First, Galderma, that's now generated a 3.7x return for our clients at the current market value with a more than $8 billion capital gain for our co-investors and a more than 100% gain for the IPO investors in the company. Performing very, very well in the Swiss Stock Exchange. Then we have Nord Anglia, that's grown from 6 to more than 80 schools since 2008. It's the biggest private education company in the world. And we're going to continue to invest in that company and participate in the value creation journey along with a number of co-investors in a $15 billion transaction. And there, we're also working to create this private IPO concept that we've talked about. And finally, EdgeConneX. I mentioned earlier this has turned into -- grown into one of the largest data center business globally. It now has a high double-digit billion-dollar valuation. We recently brought in a minority investor and keep investing in growth globally in that exciting sector. So with those words, I'll hand over to Gustav, who is going to give some more color on fundraising.

Thank you, Chris, and good to see everyone. 2024 was a continued tough fundraising year and fundraising time lines remained extended. We do not expect any significant improvement in the overall fundraising market during 2025, and our expectation is that it will take until 2027 before we are back at the same fundraising levels as we saw in 2021. However, as Chris stated, we continue to see that large managers like EQT are gaining market shares, and hence, we expect to outgrow the overall fundraising market. For EQT, 2024 marked a year of successful final closes. EQT X was closed, being the largest private equity fund globally to complete during 2024. We also concluded the first generation fundraisings of Active Core Infra at close to EUR 3 billion. BPEA Mid-Market growth above hard cap at $1.5 billion (sic) [ EUR 1.5 billion ] and EQT Future at EUR 3 billion. All of these important scale levers for us as when we come to the next fund generation. During the quarter, we continued to make progress on Infrastructure VI going from EUR 16.9 million to EUR 18.1 billion. And we expect to reach the target fund size in the final close by the end of the first quarter. With the launch of BPEA IX, we have entered into our next fundraising cycle where we expect to launch fundraisings equal to at least EUR 100 billion. For BPEA IX, fundraising is progressing ahead of our expectations. We expect the fund to be activated during the first half of the year. And we expect to approach the target fund size at the first close, which will also take place during the first half of this year. Regarding EQT XI and Infrastructure VII, the communication is the same as it was in the Q3 presentation. We expect EQT XI to be activated in early 2026 and Infrastructure VI (sic) [ Infrastructure VII ] to be activated around midyear 2026. As communicated before, this is not exact science, but we do not expect it to be earlier. However, note that the fundraising for both funds will likely be initiated earlier. Next slide, please. On the private wealth side, we continue to make progress on building out our platform. First of all, with great people the foundation. Today, we have more 100 people across sales, operations, product development and branding. Secondly, by creating partnerships globally, where we can use our strong banking relationships to get a seat at the table, a table which will be much more concentrated than on the institutional side, again, benefiting large managers. And lastly, by creating well-performing vehicles suitable for private individuals, where we use our broad platform to create diversified exposures, which very few competitors can replicate. For EQT Nexus, we've also started to see the scalability with Q4 being the strongest quarter for inflows so far and up approximately 50% compared to the average of the other 9 months in 2024. The NAV for EQT Nexus is now around EUR 1 billion and we're expecting a number of large, both regional and global distributors, to onboard the fund in the first half of this year. On the product development side, we're expecting to launch EQT Nexus infrastructure, focused in Europe and Asia and then move to the U.S. with the launch of 2 additional vehicles, one for private equity and one for infrastructure. More to come on this in our upcoming reports. And with that, I will hand over to Olof. Next slide, please.

Thank you very much, Gustav. Next, we're turning to investment and exit activity. So if you look at our investment volumes for 2024, as mentioned, it represented a new record for EQT at EUR 22 billion. We've acquired companies and assets across teams such as energy transition, changing value chain, education and digitalization. As Christian alluded to, we continued to take advantage of relatively more attractive valuation levels in Europe versus the U.S., for example, and about 45% of our investments were made across Europe. North America represented about 1/3 of the investments that we made and 1/4 of the acquisitions were in Asia. If we look at real estate, to point out one area, activity picked up with EUR 4 billion of investments. That's more than twice the muted volumes that we experienced in each of 2022 and 2023. And on the real estate side, we're seeing that buyer and seller expectations have significantly narrowed and the financing is available for real estate deals again. Next slide, please. And next turning to the exit markets where we've seen market conditions improving throughout the year. Sponsor M&A volumes were up some 16%, paced by deal activity in North America. Global ECM volumes were up some 20%, but they remained meaningfully below their long-term averages. And debt markets were very, very supportive throughout the year. 2024 represented a record year for EQT in terms of the number of exit events with approximately 30 announced realizations over the years. As you'll know, our exit events included full exits for some of our companies. We did IPOs and sell-downs in those listed companies. And we also did some minority sales, as you will have seen. In terms of volumes, the exit activity increased by some 70%, but still remained well below the level seen back in 2022. Notably, exits picked up significantly in infrastructure, and Asia represented some 15% of our announced exits. And then we still have processes, as Christian mentioned, that are underway, such as Nord Anglia still. Next slide, please. Turning to the ECM market, which has a special place in my heart. EQT was the most active private markets firm globally when it comes to ECM deals in 2024, led by Magnus in our capital markets team. Recent IPOs include Kodiak, Galderma and Sagility, which outperformed strongly in the public markets. These transactions delivered strong returns for both our clients and IPO investors, gaining between 50% and 200% in the aftermarket. And this strong performance has allowed EQT to execute a number of follow-on offerings since listing with 2 of -- 3 offerings, sorry, in each of Kodiak and Galderma. Next slide, please. Next, turning to the EQT share and a few words on our liquidity. And the share liquidity in our stock increased by some 20% year-over-year and it's up some 33%, following the lockup expiry that we had in 2024 compared to the 12-month prior period. Our weight in certain indices increased in Q4 on the back of the higher free float, and EQT is now the only private markets firm globally to be part of the Dow Jones Sustainability World Index. If we focus on the lockup expiries during 2023 and '24, approximately 20% of EQT share capital expired from lockups and that includes 12% in September of '24. If we look at the current and former employees of EQT that are subject to these lockup agreements, they continued to own a slight majority of the shares that were released over this 2-year time frame. As we look ahead, we'll be hosting various events during the first half to engage with shareholders and market participants and I'd flag our next event, which will be a sell-side analyst meeting in London next week. So with that, I'll hand over to Kim to go through the financials. Next slide, please.

Thank you, Olof, and good morning, everyone. In '24, we increased our management fees by some 7% based by closed-out commitments in our key funds. Total catch-up fees in 2024, i.e., revenues recognized in '24 relating to prior years, amounted to around EUR 90 million. Our management fees grow with the fundraising cycles, and since our IPO in 2019, we've so far had 2 significant step changes in our management fees. First, in 2021 from the acquisition of EQT Exeter and the fundraisings of EQT IX and Infra V, and subsequently, in '23 and '24 with the full year effect from BPEA Infra VI and EQT X. During the period, we have also kept our effective management fee stable at around 1.4%. We're now entering a new EUR 100 billion fundraising cycle, where we can expect another organic management fee step-up profile over the next few years. Next slide, please. In 2024, we have increased the exit pace and delivered strong value creation in the portfolio, leading to an increase in carried interest and investment income of around 50% with total recognized amount of around EUR 250 million. Of our EUR 11 billion of signed exits, around 45% were from funds in carry mode. And taking a longer-term perspective, we have material carry yet to be recognized from our current key funds, more than EUR 8 billion over the life cycle if the funds are performing on the plan. So for our funds currently in carry mode, we have another EUR 1 billion left to recognize, driven by continued value uplift and exit events. And keep in mind that the 30% to 50% discount on unrealized values are removed when a company is exited. Based on the 4 key funds that are currently in carry mode, near-term carry recognition for EQT AB will primarily be driven by exits. We have an optimistic view on the exit environment for 2025, but volumes will depend on how market conditions evolve. With 10-year-plus funds, we still have another 3 to 4 years to go, so we can be patient to optimize returns if market conditions are not right at any given point in time. For the next funds to enter carry, let me elaborate on the rule of thumb. So typically, a fund should be at 1.7 to 1.8x gross MOIC, should be 4 to 6 years into its life cycle and with a few material exits concluded. Taking a closer look at Infra IV and EQT IX, these funds still need to execute exits material for the fund. And given the slower deal environment in recent years, it's reasonable to expect recognition for these funds to start towards the back end of our rule of thumb. So 6 years-plus rather than 4 years. We're not expecting to recognize carry for these funds in 2025, and thereafter, timing will depend on the exits and the pace of value creation. For our most recent vintages, naturally these funds are still investing and carry is expected further out in time following a period of value creation. And you should expect BPEA VIII to be the first out of these funds to enter carry mode, now also expected to perform above plan according to our framework. And finally, remember, as we have mentioned previously, we have a young portfolio, less than 20% held longer than 5 years. We have 10-year plus funds and carry is back end-loaded. And all key funds continue to perform on or above plan, but we expect exits 1 to 1.5 years later versus the initial underwriting case in certain funds. And cash carry often comes some 2 years after carry is recognized on the P&L for accounting purposes. And from a top-down perspective, in 2021, we had about EUR 30 billion of exits and recognized EUR 500 million of carry. Next slide, please. We are and have always invested for future growth. Our EBITDA margin target stands at 55% to 65% with figures at the upper end of that range or above in years of substantial carried interest recognition. Since the IPO, we have increased our fee-related margin from 43% to 53%. And currently, the fee-related EBITDA margin is impacted by incremental costs relating to our future growth, in particular related to our efforts in private wealth, in institutional capital raising and in the new strategies that are not yet at scale. As we complete the EUR 100 billion fundraising cycle, we expect to reach the 55% to 65% range also on a fee-related EBITDA basis. In 2024, an initiative related to the U.S. multifamily fund was discontinued following a challenging fundraising market. The associated costs and revaluation of the multifamily investment has an approximately EUR 80 million impact net of tax in the reported P&L, adjusted for as an item affecting comparability in our adjusted accounts. Next slide, please. At the time of the IPO, we had 6 distinct strategies. Today, we have increased that number to 18. Of these, 10 are still at early stages of scalability and profitability and it will take around 2 to 3 fund generations before these have significant positive contribution to our profitability. Our early-stage strategies, Ventures and Life Sciences, will not scale to the same levels as our flagship strategies, but they do support our platform through sector knowledge sharing and complement our overall offering so that we can provide our clients exposure to companies from emerging to mature. We're very excited about the prospects of our private wealth strategies. However, we all recognize the fact that they will take multiple years to scale. Next slide, please. Our growth efforts are naturally also reflected in the build-out of our organization. We're adding people in private wealth and institutional capital raising. We have gone from some 50 people dedicated to private wealth in 2023 to around 100 in 2024, as mentioned by Gustav. And this is reflected not only within the capital raising team, but also within functions such as fund operations, product development, brand and marketing and other related teams. Regarding real estate, we have reduced the number of employees in the U.S. following the decision to discontinue the initiative related to the U.S. multifamily fund and thus to optimize team size. Next slide, please. Our balance sheet continues to be robust and well capitalized, and we're expecting more substantial cash carry interest in the coming years. So we continue to actively use the balance sheet to support growth initiatives and recently focusing on the upcoming private wealth products. We also repurchased 4.2 million shares to offset the potential dilution from equity incentive programs. And the proposed dividend of SEK 4.3 per share in 2024 is around 20% higher than the year before, in line with our dividend policy of a steadily increasing dividend per share. Next slide, please. So putting it all together, we have entered a new fundraising cycle expecting to launch fundraises of EUR 100 billion to drive the next step-up in management fees. Our carry prospects over time are material, in the short term driven by funds already in carry mode and highly dependent on exit activity. Current margins are impacted by costs taken to spur future growth. And we're acting to grow margins over time to reach the 55% to 65% EBITDA margin target range on a fee-related basis. With that, I hand over to Chris to conclude. Next slide, please.

Thanks, Kim. So 2024 was a year of record investments, improved exit activity and solid value creation. Now looking into this year, we expect Infrastructure VI to close this quarter and fundraising for BPEA IX is progressing ahead of our initial expectations. We have a pipeline of more than 30 exit events for the year. And of course, we're going to be patient if the markets turn more volatile than they are today. And overall, our industry is set for long-term growth. So we're strengthening our platform, introducing new strategies and distribution channels so we can really grasp that opportunity ahead. And with those words, I'd like to open up for the Q&A.

[Operator Instructions] And your first question comes from the line of Bruce Hamilton from Morgan Stanley.

Maybe the first one, looking at the sort of wealth opportunity and the build-out there. So you pointed to a decent tick-up in the momentum in the Nexus product in Europe. But as you think about the U.S., where are you in terms of the kind of number of distributors you signed up? And so how quickly do you expect those products could ramp given obviously sort of the U.S. firms have ramped pretty quickly in private equity in the last year? And then on the sort of brand point in the U.S., how much of a constraint is that? Or do you feel you're in a pretty good position? That was the kind of first question. Second one, and thanks to the additional sort of granularity on sort of how to think about carry. But I mean, if I think about consensus numbers, I think they've now come down to EUR 630 million or something for '25. So should I think about this that you've got EUR 1 billion still to be delivered from the funds in carry and that would -- you'd expect to be delivered over the next 2 years, say? And so level loaded, that would be a bit of downside, so it depends on the sort of how strong the market is in '25 but it's not impossible. Is that kind of the way to kind of read it? And then very final point, just on the real estate sort of impairment. Is that a very isolated thing? I guess it speaks to the challenges in real estate? Or is it completely isolated or are there other areas that could be under review?

Thank you, Bruce. Gustav will take the first one and the second one; Kim, the third and the fourth. Then I'll comment thereafter.

Yes. And I would say that on the private wealth side in the U.S., given that we are right now in regulatory filings for the products, and hence, we are really constrained on what we can comment, so to speak, I think, in general, what I would say is that, of course, we wouldn't launch the products unless we feel that we have, let's say, momentum with the distributors. And that, of course, goes both for the European and the U.S. products. On the branding side, I think that it compares -- it depends a little bit on what you compare with. I would say, of course, if you would compare us to the U.S. players -- some of the U.S. players, I think, we, of course, recognize that we don't have the same brand recognition to start off with day 1 launching in the U.S. But of course, over time, this will also be dependent on the relationships that we have with the distributors. This is still a product that's, let's say, being sold, not bought. And also, of course, the performance that we deliver in the products where we feel that we will continue to have well-performing products, and hence, be very competitive from that perspective.

Yes. And I'll just add a comment there. And as you know, we also have strengthened the team around branding communications. We have now a very active program we call EQT ThinQ with the client communications. And in terms of North America, we're investing almost half of the flagship infra fund, the lion part of the real estate business, and about 40% of the private equity strategy there. So we're talking tens of billions of dollars that's invested. So we are a bigger player in the U.S. than people might think. And of course, we're building out all the capabilities in communication to ultimately have a very strong brand there as well.

And on carry, Bruce, I would note that we have given some more pedagogic breakdown of it here and more granularity, as you say. That doesn't mean that we would want to comment on where we think we will come out in relation to consensus, that's not really how we want to deal with it. What I would say, though, is that your maths are broadly fine, but we do not say whether it's going to be in '25 or '26 that EUR 1 billion that is left to be recognized. And remember that EUR 1 billion was calculated on a basis of on-plan performance in those funds as well. So I can't give you more information on that at this point. And then on the real estate, well, it was a very specific situation with -- where we have discontinued that fund initiative. There's been management changes, et cetera. So we see it as an isolated situation and that's why we've also classified it as a nonrecurring item in the accounts.

We will now take our next question. And the next question comes from the line of Hubert Lam from Bank of America.

Great. I've got three of them. Firstly, can you discuss your views in terms of the outlook in terms of activity, both investments. You also talked about exits also for 2025. I guess, in the start of the year, we expect central rates to cut -- the central banks to cut rates and now probably in the higher rate environment for longer. So just wondering how you see the scenario around the outlook, around the macro and rates and how it impacts your expectations for this year? Second question is on your Transition Infrastructure fund. Maybe can you just talk a little bit more about what you think about the size and timing for this fund. I think the reports out there suggesting it could be as big as EUR 4 billion. Just wondering if you can comment on the size as well as when do you expect this fund to be activated and possibly closed? And lastly, maybe talk a bit about cost growth, the expectations for this year as well as FTE growth.

Yes. Thank you. So on the outlook, I think what's more important for investors globally and for the capital markets globally is stability. And if you look back into 2024, I think 75% of the world's population went to vote, including some of the largest economies in the world and the largest economy. So -- and if you look at geopolitical tensions, those tensions have come down a little bit. And the underlying growth forecast around the world are pretty healthy. Europe a little bit less, but not in the sectors that we're investing in. So if you look at the equity capital markets and the debt capital markets, they're super healthy. There's a lot of capital in private markets with strategic buyers with family offices, et cetera, that are ready to do M&A. So when you put all the factors together, we're expecting a continued quite active year. Like we said, we have more than 30 exit actions planned across private and public exits. Of course, this is dependent on market conditions. But our reading of the market, the way we're discussing it with counter-parties across the world, that's the current outlook that we have and we're executing behind that. On the deal flow side, as you know, with being local with locals in thematic, we have these 2 axes that are continuously searching for deals. So we have a strong deal flow across all sectors and regions. And we're just trying to deploy capital at a measured and good pace so that we can stay on this kind of 3.5-year type of time cycle for the fundraises.

And maybe I take the Transition Infra question. So as I think you might remember, we talked earlier about that the early -- let's say, the first fund generations, we typically say that the smaller ones are in the, let's say, EUR 1 billion to EUR 2 billion type of fund size and the larger ones are into, what we've said, EUR 3 billion to EUR 5 billion fund sizes. And we will categorize Transition Infra in the larger bucket there, so EUR 3 billion to EUR 5 billion. We have just done the first 2 deals based on a commitment from our balance sheet. We're right now in dialogue with anchors, but that means that the fundraising is just getting launched now. So you should expect that activation will happen here during Q1 of this year. And I would assume that the fundraising will continue for a good part into 2026 as well.

And on head count growth, Hubert, we had approximately 100 of increase during 2024. And we will, in '25, continue to increase our efforts in private wealth. We will continue to grow in certain specific regions and pockets on the investment professional side, staying broadly flat on the more central and support services with the exception of private wealth-related things, which leads me to say that a similar head count number increase is not an unreasonable expectation for 2025.

Your next question came from the line of Haley Tam from UBS.

Could I ask one quickly on the exit outlook and then one on carry as well. So with the exit outlook, you said there's more than 30 exit events planned for 2025. I just wondered, could you give us any indication of the total volume this might represent? And then in terms of carry, thank you for the additional comments around when Infra IV and EQT IX might go into carry mode. Could I just understand that because obviously Infra IV is now at 1.9x multiple invested capital, so well above the 1.7 to 1.8, and EQT IX is obviously at 1.6, so is there something different about these funds perhaps in terms of bigger haircuts on unrealized deals? Or just to try and help us understand why they won't be going to carry mode, you think, this year?

Thank you. On the exit outlook, as you know, we don't give guidance on the number of transactions that we will do, and therefore, also connected to that, the carry. And it depends very much on market conditions and the type of deal. So every situation, we have multiple exit paths that might be -- if it's a private company, we might be looking at a recap or a partial sale or a majority sale or a full sale. We could also look at an IPO. If we have a public company, we might do a book build, we might do a smaller sell-down, a strategic might take a stake. So there are a lot of variables in the transaction industry, and that's why we're trying to indicate the number of activities that we have, the same as we had last year a number of activities. And I think it's hard to be more precise than that other than to say that this has a super high priority for us as a firm, for our clients and for our industry.

And on carry, if I may add to that then. First of all, what we have given is a rule of thumb and a rule of thumb is just that. So there's always going to be a difference to it. And it revolves around both the MOIC, but also the timing and the number of exits. And I guess, the recent past has seen less in terms of exit activity than we would have expected at the start of those funds and a somewhat prolonged fund sort of holding period during that time. Those would be the differences in timing of carry.

Your next question comes from the line of Arnaud Giblat from BNP Paribas.

Thank you for the incremental performance disclosure. That's -- I find it particularly helpful. I've got three questions. Again, if I could come back to the outlook for activity. Your U.S. peers are particularly optimistic on the outlook for capital markets in the U.S. As a global player, can I ask you if you see a bit of a divergence going on between Europe and the U.S.? And secondly, I mean, obviously, you've got really good momentum in Infra and in Asia. I'm wondering at what point would you consider building out a more meaningfully Infra in Asia? I mean, I see that you're going to do this with the wealth products, but in terms of maybe launching a flagship strategy there? And my final question is consolidation continues at pace in the industry. Is that something you're still considering? Or actually an update on your thoughts there would be helpful.

Thank you. Good questions. Now if you look at the outlook, I think the global capital markets have a positive outlook probably driven more by the U.S. and the expected increased economic activity with the new administration there and what's expected to currently be stable interest rates. We don't yet know, I don't think we have a consensus yet for what's going to happen there. So I think exit conditions and deal conditions are good in all regions. Now the underlying economic activity, of course, varies a lot. India is our fastest-growing market. And there, we have 2 exits planned at least. We have really strong deal flow and strong underlying performance. In the U.S., we have a fairly strong economy, as you know. I think I mentioned in Europe the sectors that we're in are also growing nicely. And so it breaks down into geographies and sectors. And we're not -- so we're not leaning towards a particular region in our commentary there. Now when it comes to the Asia question, if you look at Infrastructure today, about 10% to 15% of our global Infrastructure fund has invested in Asia, at our first exit in India where we made 3x the money in the renewables business that we developed together with Temasek. And so we're off to a good start. And what we typically do when we enter new regions or new sectors is we do a number of deals, prove the track record. And then when the track record is set, we build a strategy around that. So your question is very good, but we don't have a time line for that initiative at this point in time that we can communicate. Finally, the consolidation of the industry yes, we are in -- and as we always say, we are in active dialogues with many different players to understand where the industry is going, how different strategies can complement EQT. And those discussions sometimes they lead to a transaction. But there are many hurdles that we need to meet. It needs to fit very well strategically, it needs to be a top-performing business and it needs to have -- and the team needs to be a great fit with us and with them, the cultural and values fit need to be superb. So we're quite picky, but there is a lot of activity and we expect the consolidation to go on in this industry for the next 5 to 10 years and actually be very substantial. But at the same time, we'll see a number of funds winding down as we've already mentioned in the report.

Your next question comes from the line of Ermin Keric from Carnegie.

And apologies if anything of this has been gone through because I got cut off in the middle of the call. But starting off, I mean, you mentioned about 30 planned exit activities, I believe, and you had about the same in 2024. Could you just tell us if you expect kind of the type of activities to be very different? I suppose it ties back kind of before to the volume question for '25, how we should think about it? And also you mentioned that you did EUR 30 billion of exits in '21 for EUR 500 million of carry. And I suppose this year, you did about EUR 11 billion of exits and EUR 250 million. So the proportion is quite different. Is it something specific that's making it differ in '24? Then on fundraising, BPEA IX has -- seems to be going much faster than Infra VI. Would you say that's driven by a better market? Or are they not really comparable because it's completely different strategies? And then just lastly, maybe on Infra VI -- or sorry, on Infra IV. I suppose that the MOIC rule of thumb is met and also the timing. So it seems like the DPI is the main trigger we're waiting for. Could you give us any kind of rule of thumb for the DPI that you're looking for before you recognize carry?

Okay. I can take your first question, Ermin, as it related to exit activities. And yes, indeed, we covered some of this when you dropped off the call based on an earlier question. You're right. We had about 30 exit events last year. This year, we're planning for another 30 exit events. To plan for these events is what's within our control and that's what we set out to do, to be ready to execute if the markets are right. Of course, we don't know whether the market is going to be right. But if it is, we are ready to execute. We, on purpose, don't link it to a volume number. It will be depending on what type of exit we actually execute, we could do IPOs, minority sales, full sales, et cetera, et cetera, as you know. So it will depend a bit on how these exit processes come along. So I'll keep it at that. And Kim, next question, do you want to cover the next one?

Yes. Maybe on the exits -- yes. Well, first of all, I'd say, of course, there's -- you need to look at whether the exits are in funds that are actually in carry mode. That impacts the number, of course, quite dramatically. I'd also point to that '21 had significant exits on the real estate side, which did not have any carry associated with them. So there's -- it's not like-for-like. This was the top one -- top-down observation on the sort of -- on the size of that. Then on DPI, I guess we haven't really given a tangible number there, but you're pointing to the right topic, i.e., you need to have real cash exits in the funds with money delivered back to the investors in order to get to carry mode. And the DPI rule of thumb also differs depending on whether you have -- you are in a situation as we have been in the last few years with pretty slow environment and slower exit environment, in particular, or whether you are in an environment where the churn is quicker. So I don't want to give you an exact number, but hopefully, that's somewhat helpful.

And then maybe on BPEA IX. I would say a couple of things. One is the market -- I think the market timing for when Infra VI was launched was probably, let's say, the worst period of time on a relative basis in this window that we've seen, so to speak, in, let's say, early 2023. So of course, from a fundraising market perspective, we're seeing that this -- we're not seeing much higher volumes now compared to that point in time. But then there was a lot of standstill in the market, which affected timing for Infra VI. I think that's one, of course. Secondly, there is a size difference between them. And then I would say, thirdly, we see that for BPEA IX, we're getting a lot of positive, let's say, traction related to the relative strength of the BPEA platform in Asia, which, of course, is also helping.

Your next question comes from the line of Angeliki Bairaktari from JPMorgan.

First of all, with regards to the EQT Nexus inflows that you've seen this year, can you give us some color on which countries are driving most of these inflows? Is it the Nordic countries where you first started? Is it Asia? Any color there would be much appreciated. Then second question with regards to the IRA funding pause in the U.S. that was signed, the executive order, earlier this week by the new administration. Does it have any impact on your investment portfolio at all? And third question with regards to Exeter and the real estate business. What management fee rate should we assume for the fee-paying AUM there? And are there any transaction or other fees that supported the management fees that we see from Exeter this year?

So maybe I start with the EQT Nexus. I won't comment on, let's say, specifics, but I would say that the development that we're seeing now is a much more global inflow and that, let's say, the relative strength of the Nordics, as we had expected in this, has gone down significantly. So in Q4, the significant majority of the capital was raised outside of the Nordics, which I would say that we would -- we still expect to continue to have good inflow from the Nordics. But now we're seeing, let's say, the global rollout paying off.

On the IRA, the way we invest in infrastructure is across a number of different sectors, the digitalization society, the transportation sector, the, let's say, the aging population around health care et cetera, and of course, also the energy transition. And if you look at those 4 sectors, even in the energy transition, everything we're investing in are proven technologies, commercial companies, profitable enterprises. So we've never made an investment that's been dependent on the IRA or the New Green Deal (sic) [ Green New Deal ] or the EU Green deal for that matter, and we've been very careful not to take political risk in our investments and continue to do so. So we don't yet see any positive nor negative impact. And we continue to have lots of investment opportunities across those sectors, across regions.