EQT's Resilience in a Turbulent Market: Can Strong H1 Performance Sustain Long-Term Growth?

The private equity industry in 2025 is navigating a landscape marked by uneven recovery, macroeconomic uncertainties, and structural shifts in investor behavior. Amid this backdrop, EQT AB (publ) has emerged as a standout performer, delivering robust first-half results that have attracted attention from analysts and investors alike. With a 35% increase in fund size for its latest infrastructure vehicle and a 3x return on realizations, EQT's ability to capitalize on strategic exits and fundraising momentum raises a critical question: Can this performance sustain itself in a sector still grappling with liquidity constraints and geopolitical headwinds?

EQT's H1 2025: A Masterclass in Capital Allocation

EQT's first-half results reflect a disciplined approach to capital deployment and exit execution. Total assets under management (AUM) rose to €266 billion, driven by €18 billion in gross inflows, including the hard-close of its €21.5 billion EQT Infrastructure VI fund. This success is not accidental but a product of EQT's long-standing focus on high-conviction sectors such as digitalization, energy transition, and infrastructure. The company's ability to scale its infrastructure platform—now the largest in Europe—has positioned it to benefit from global trends like decarbonization and urbanization.

Exit activity further underscores EQT's operational prowess. The firm reported €13 billion in gross fund exits, more than tripling 2024 volumes, with notable transactions including the €15 billion stake sale in IFS and the full exit of Nord Anglia Education. These exits, which generated a 2.3x return on average, highlight EQT's capacity to unlock value in its portfolio even as broader private equity markets face valuation compression. By prioritizing sponsor-to-sponsor transactions and public market sell-downs, EQT has mitigated some of the liquidity challenges plaguing the sector.

Navigating the Private Equity “Perfect Storm”

The broader private equity environment remains fraught with challenges. Fundraising for traditional commingled vehicles fell 24% year-over-year in 2024, marking the third consecutive decline, while exit backlogs remain at record levels. High entry multiples, elevated interest rates, and geopolitical risks have made it harder for managers to realize returns. Yet EQT's performance suggests it is better insulated from these headwinds than many peers.

The firm's focus on infrastructure and private credit—a sector that has historically shown greater resilience during market downturns—has provided a buffer. EQT's AUM growth, even after adjusting for foreign exchange effects, outpaces industry averages, reflecting its appeal to institutional investors seeking yield in a low-growth world. Additionally, its launch of EQT XI, a €23 billion flagship fund targeting 2026, signals confidence in its ability to attract capital despite macroeconomic noise.

However, sustainability remains a question. The private equity industry's reliance on GP-led secondaries and continuation vehicles to manage liquidity pressures could become a double-edged sword. While these structures help address LP demands for flexibility, they also risk diluting returns if overused. EQT's 5.5% average return on realizations (excluding FX) is strong, but maintaining this pace in a higher-rate environment will require continued operational rigor.

The Analysts' Buy Ratings: Validated or Overdue?

Recent Buy ratings from Bank of America and Barclays hinge on EQT's financial strength and strategic differentiation. Bank of America's $63 price target (6.44% upside) emphasizes the firm's robust free cash flow and margin expansion, while Barclays' $65 target (9.82% upside) highlights its leadership in infrastructure and Asia. Both firms acknowledge EQT's ability to navigate a fragmented fundraising environment by leveraging its brand and co-investment opportunities.

Yet skepticism persists. Insider selling by EQT's CFO in April 2025, coupled with a 64.58% core efficiency ratio (slightly above consensus), raises questions about internal confidence. While these metrics do not necessarily invalidate the analysts' bullish outlook, they underscore the need for caution. The private equity sector's uneven recovery—marked by divergent performance across sub-asset classes—also complicates long-term projections.

Investment Implications: A Case for Selective Optimism

EQT's H1 performance demonstrates its capacity to thrive in a challenging environment, but investors should approach its recent momentum with a nuanced lens. The firm's strengths—strong exit execution, diversified asset classes, and a robust balance sheet—are hard to ignore. However, the private equity sector's structural challenges, including prolonged capital cycles and shifting LP preferences, remain unresolved.

For those considering a stake in EQT, the key is to monitor its ability to maintain exit momentum and adapt to evolving market conditions. The firm's focus on AI-driven value creation and its expansion into private wealth offerings (e.g., EQT Nexus Infrastructure) could provide tailwinds. That said, the risk of overvaluation—reflected in its elevated P/E ratio—cannot be overlooked.

In the short term, EQT appears well-positioned to capitalize on its current trajectory. But in the long term, its success will depend on its ability to balance growth with prudence, a test it has historically passed. As the industry inches toward normalization, EQT's blend of scale, innovation, and operational discipline may well set it apart.