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EQT LOOKS EAST

Every private equity firm needs a strategy for China. Close ties with Hong Kong-based Investor Capital Partners is the centre piece of EQT's.

Conni Jonsson, a recreational boxer, isn't one to stand still. The chief executive of Scandinavia's pre-eminent private equity firm much prefers to keep on his toes, and the business he runs is anything but stagnant as a result.

Earlier this year, Jonsson actioned a number of changes to EQT's senior management team, testimony to a conviction that in order to buy assets well and manage them tight, private equity firms need to have the most hungry executives in the ring at all times. In September, the firm recruited Petri Myllyneva, a former lawyer and corporate executive to take over the running of its Helsinki office; in July, partner Marcus Brennecke was appointed head of EQT in Germany, replacing Björn Höi Jensen in the role. Jensen remains a key figure at the firm.

Back at its Stockholm headquarters at 6 Linnegatan, EQT has also been busy adding a new investment strategy to its portfolio of LBO and mezzanine capital investment vehicles. According to market sources, the firm is in the process of raising a €250 million turnaround fund, a vehicle that will negotiate directly with creditor banks of troubled Northern European middle market companies in order to acquire their equity. EQT veteran Häkan Johansson is expected to lead the charge. EQT declined to comment on the project, but if the fund goes ahead, it will be the first of its kind in the Nordic region.

Meanwhile Jonsson and his colleagues are thinking about China. “As an owner of businesses that operate in global markets, having a presence in China is today imperative,” argues Jonsson. That is why EQT is working with an already existing relationship, Investor Capital Partners, a Hong Kong-based private equity manager, focusing on control buyouts in Greater China.

ICP, which is currently investing the $322 million Investor Asia Fund, was set up in 2000. The group is run by a seasoned executive Winnie Fok and is sponsored by Investor AB, the Stockholm-listed holding company controlled by the Sweden's Wallenberg family. Investor is also the group that started EQT in 1994 and remains a significant limited partner in the group's investment vehicle.

From ICP's inception, Jonsson and Claes Dahlböck have been members of the firm's supervisory board, where Björn Höi Jensen is now also poised to take a seat as well. In addition, EQT investment professional Fredrik Âtting is about to join ICP. In Hong Kong, Âtting is likely to have a busy schedule, as ICP is in the process of marketing a follow-on investment fund.

According to Jonsson, the ICP knowledge in Greater China has assisted in several EQT portfolio companies streamlining their operations in Europe and moving production to China. And his own firm is benefiting too he says, not least when it comes to sourcing deals in Europe: “It helps when you can tell a German CEO what you can do for them in China.”

Jonsson is adamant that EQT must have awareness of important markets around the world. Proximity to the US is provided by the firm's extensive network of heavyweight industrialists. In Central and Eastern Europe, Jonsson is expecting “organic growth” for EQT. Asia is covered through the relationship with ICP.

With a reach like that, the firm should have enough muscle to throw big punches – just like the fast-moving Jonsson expects.