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Future-proofing EQT for tomorrow’s challenges, today

#EQT Update

EQT is in the business of developing sustainable companies with abiding time horizons, built to outlast temporary market fluctuations, as well as societal shifts. During the last 25 years EQT has supported some 240 portfolio companies in achieving their full potential. But do we really practice what we preach?

How do we prepare our own organization to face tomorrow’s challenges? To get a better understanding, we sat down with EQT’s Heads of HR, Digitalization and Sustainability to learn more how their teams future-proof EQT for tomorrow’s challenges, today.

From your perspective, what are the major challenges the private equity industry is facing today?

Anna Wahlström, Head of Human Resources: Our main challenge is preparing for the future! Our model is predominantly to hire talent that will grow with us into partners over the next 10 to 15 years. But as the world is changing and evolving, how do we know which skills will be needed in 15 years’ time and how do we ensure we hire and develop talent in the best way? This also ties into creating the right team, incorporating a broader set of skills, approach, network and knowledge than generations before. Our industry has taken big steps into becoming much more diverse, but we still have a way to go in this area.

Therése Lennehag, Head of Sustainability: I would like to turn the question around and argue that the future looks bright. Every day we get bombarded with a magnitude of the challenges facing society. As a long-term investor with an active ownership model, a sense of urgency and an alignment of interests, these challenges can become an opportunity and private equity has an increasingly important role to play moving forward. But to capitalize on these opportunities, we need to challenge our current ways of working, question our perspectives and ensure that we stay just as entrepreneurial, action-oriented and bold as when EQT was founded 25 years ago. We need to embrace circular, digital and transparent business models and invest behind themes and companies with positive societal contribution.

Olof Hernell, Chief Digital Officer: One major challenge is the risk of categorizing deals as ”tech deals” and “non-tech deals”. Today, every deal can be viewed as a tech deal. Even the most traditional industries are facing fundamental technology changes and disruption, and those in the private equity industry who continue to view the world solely through traditional lenses will probably invest in the wrong companies and leave a lot of value on the table. Companies that cannot adapt, will be left behind. Understanding the disruptive dynamics and the conditions for the target asset to navigate is key.

Looking at ourselves, private equity firms are not immune to these challenges and opportunities. The increasing complexity of our products, increased compliance pressure and higher expectations from investors will give the private equity firms with operational and data excellence an edge. The future competitive advantage will lie with firms that can systematically capture and leverage data, not only external and performance data, but also human predictions, judgements and decisions.

How does your team future-proof EQT and make sure that the firm stays ahead of the curve?

Anna Wahlström: We constantly try to challenge the status quo and we use research and analysis to understand what we at EQT need to change and adapt to adjust to current and future needs. Our work in the HR team is focused on EQT in 10 to 15 years’ time as we want the people we hire today to become the future leaders of the firm. That approach creates a sense of urgency of acting now when it comes to diversity, inclusive culture, digitalization, knowledge sharing and our approach to learning and development.

Therése Lennehag: On a macro level we are moving beyond GDP, on an industry level we are moving beyond IRR. Going forward, attractive financial returns will be EQT’s ticket to play, positive societal impact will be our differentiator to succeed. The Sustainability team acts as a catalyst and facilitator in this process. Our role is to disseminate knowledge into the organization, bring more diverse perspectives to the table and to inspire. The ultimate goal is not to create followers but leaders, because sustainability is not the exclusive domain of the sustainability department. It is an integrated part of EQT’s everyday investment activities and operations so that everyone in the organization is empowered and feels that they can make a difference.

Olof Hernell: The industry players that can systematically build heterogeneous teams, both internally and in portfolio companies, will have a competitive advantage. The advisory deal team of the future will probably consist of a constantly changing mix of bankers, finance ninjas, data scientists, digital growth gurus, tech people etc. The same goes for boards and leadership in the portfolio companies. EQT initiated a program to acquire top digital talent to the firm four years ago - and we are not slowing down.