EQT Navigates Tariff Risks with Resilient Sectors and Strategic Patience

As global trade tensions escalate, private equity giant EQT AB (publ) has positioned itself as a bastion of resilience, leveraging its sectoral focus and liquidity to weather tariff-driven headwinds while recalibrating its exit strategy for a turbulent 2025. The firm’s Q1 2025 results—highlighted by a surge in exits and a cautious outlook—reveal a playbook for navigating macroeconomic uncertainty, blending defensive positioning with opportunistic flexibility.

Limited Direct Exposure, but Indirect Risks Loom

EQT’s portfolio faces minimal direct exposure to tariffs, a strategic advantage rooted in its avoidance of manufacturing and goods-heavy sectors. Instead, its €40 billion+ investments are concentrated in healthcare, software, and essential infrastructure, sectors less prone to disruption from trade wars. This focus is underscored by its Q1 exits, which included a €10 billion windfall from the sale of Nord Anglia Education, a global education provider insulated from physical goods tariffs.

However, EQT warns that broader macroeconomic fallout from tariffs—such as inflationary pressures and supply chain shifts—could indirectly strain portfolio companies. The firm points to slower global GDP growth and constrained financial markets as key risks, though these remain “non-material” for now.

Exit Momentum Meets Market Headwinds

EQT’s Q1 2025 exit performance was a standout, with €4 billion in gross fund exits, tripling its Q1 2024 tally. Notable wins included partial exits from public holdings like Galderma (up 18% YTD) and Kodiak, leveraging strong healthcare and infrastructure valuations. Yet CEO Christian Sinding cautioned that “exit activity will slow materially” for the rest of the year.

The slowdown stems from deteriorating public market conditions: European tech stocks are down 12% year-to-date, while private equity multiples have compressed. EQT’s response? A pivot to a “hold-and-build” strategy, retaining stakes in high-potential assets like Nord Anglia through its BPEA VIII fund.

Dry Powder and Patience as Competitive Edges

With €50 billion in undrawn capital, EQT’s liquidity buffer positions it to capitalize on market dislocations. This “dry powder” advantage—double the €25 billion average of its top 10 peers—allows the firm to extend hold periods or acquire distressed assets. Sinding emphasized EQT’s 30-year track record of navigating cycles, noting that 65% of its portfolio now includes firms with science-based sustainability targets, reducing reliance on cyclical industries.

Sustainability and Evergreen Strategies Signal Long-Term Focus

EQT’s push into evergreen funds—perpetual investment vehicles—reflects its shift toward perpetual capital. The newly launched EQT Nexus Infrastructure fund and a planned U.S. infrastructure product aim to lock in long-term returns in sectors like energy transition and digital infrastructure. These moves align with its sustainability push: 54 portfolio companies now have ESG targets, shielding them from regulatory and reputational risks.

Leadership Transition and Shareholder Value

The upcoming CEO transition to Per Franzén on May 27 adds continuity, as Sinding remains an institutional partner. EQT also repurchased 1.5 million shares in Q1 to combat dilution, signaling confidence in its stock.

Conclusion: Resilience Through Sectoral and Strategic Precision

EQT’s 2025 strategy underscores the power of sector selection and liquidity management in volatile markets. While tariffs and macro risks loom, its focus on healthcare, infrastructure, and sustainability—paired with €50 billion in dry powder—creates a durable moat. The firm’s Q1 exits prove it can generate liquidity even amid headwinds, but its real edge lies in its ability to wait out cycles, as seen in its 65% ESG-aligned portfolio.

As peers face fundraising challenges—2025 PE fundraising is projected to drop 20% from 2021 highs—EQT’s closed funds like EQT Infrastructure VI (€21.5 billion) and BPEA IX ($10 billion+ raised) demonstrate enduring investor confidence. In a world of trade wars and economic uncertainty, EQT’s blend of defensive positioning and patient capital may just be the blueprint for private equity survival—and growth—in 2025.