Good morning, everyone, welcome to the EQT Q4 announcement. I just want to start with a quick reminder, and that's that we publish updates on our investment and our exit activity, as well as our AUM development and the valuation of key funds on a quarterly basis. That means that today we're not presenting our fiscal year financials. They are going to be presented at our meeting on February 12th. Today, I'll be presenting in the beginning, then I'll be handing over to Kim Henriksson, our CFO. Caspar will then round off the call, we also have Åsa and Pavin from shareholder relations today attending, we'll all be there for the Q&A. We have a presentation that you should see on screen, starting with what's page two the highlights for the quarter.
The total investments by the EQT funds amounted to EUR 1.9 billion here in the last quarter of the year. New investments include SHL Medical in Switzerland and Recover Nordic in Norway. Both of those are in EQT VIII in private capital. We also invested in Metlifecare in New Zealand through our EQT Infrastructure IV fund, which is in the Real Asset segment. On the flip side, we've had quite a busy exit quarter, which is good, with a total gross fund exits of EUR 2.4 billion. Looking at the full fiscal year, which we believe is more interesting, actually it's been a year of record activity. Our total investments by the EQT funds ended up at EUR 11.9 billion, up 38% versus last year. We've also there had very strong, good exit activity for the year, with total exit of EUR 8 billion and that's about 58% up year-over-year.
Looking at the overall portfolios, we are pleased to see value creation in our key funds developing according to plan, both in private equity and in infrastructure and actually above plan in Infrastructure III. On the fundraising side, we have been also quite active during 2019. As everybody saw, we announced Ventures II at the hard cap a few months ago. We are continuing with our fundraising of real estate that remains with its target of EUR 750 million to EUR 1 billion. We then ended up at an AUM for the year at EUR 39.9 billion. This is slightly down versus Q3. It is natural because it is a result of the positive exit activity, which then, of course, reduces the net invested capital. As a firm, we are continuing to grow. We are now over 700 employees, and we are continuing to build the business for the future.
As everyone saw, we recently also announced the target fund size for EQT IX. That's the successor fund to our flagship PE fund in EQT VIII. The target size is set to EUR 14.75 billion, and we expect the terms to be materially the same as EQT VIII. As a reminder, in our industry, there are quite strict marketing rules that restrict public statements relating to fundraising. Therefore, we can't provide additional detailed comments on our capital-raising activities. Probably the one question that people will have, and that is what is the hard cap of the fund? We do not set the hard cap until we get nearer to the first close of the fund. We won't be able to comment more on that today. Back to deals. Yesterday we announced quite an interesting and thematic investment in renewables in India.
This is in our global infrastructure business in Infrastructure IV. With that, Infrastructure IV is now 60%-65% invested. This is a region where we've had cooperation with Temasek for quite some time. Also in this context a comment on the next infra fund. Here you should not expect us to be fundraising two flagship funds at the same time. Private equity and infra or equity and infra will not be fundraising simultaneously. I remind everybody that the typical investment pace is about 20%-25% of a fund per year. However, if this investment pace remains in infrastructure at the relatively high pace that it's at we will investigate either solutions to bridge or extend the Infrastructure IV fund.
We have initiated a strategic review of the EQT Credit Business segment, and we're going to come back to that with some more details later in the call. We can go to the next page, and I wanted to just take a step back and remind everybody of the purpose of EQT. Our purpose is to future-proof companies and make a positive impact. What we mean by future-proofing is really in everything that we do on the investing side, really investing thematically for the long term and pursuing attractive long-term secular trends and then driving positive change in companies through, for example, digitalization. Our company should be better suited for the future when we sell them than when we buy them. On making a positive impact, this is something that has two facets.
One is that we do work very hard to transform and improve and develop the companies that we invest in and the assets that we invest in. It also has a sustainability element, and we're integrating sustainability in everything that we do, from deal selection to our value creation plans and actions. This means since we want to make a positive impact with everything we do, it means also that you should not expect us to have a separate impact fund, but rather that we work to have a positive contribution to society in everything we do. On the next page, also taking a step back, we're operating in a growing industry, and we are a growth company, and we're continuing to invest for future growth, and we want position for that. We see quite a lot of opportunities across various investment strategies and geographies.
Caspar will come back to that a little bit later. In order to pursue these opportunities, we do need to continue to scale, digitize, and automate our business. We are making quite a lot of investments in taking actions to make sure that we have a continued strong platform for the future. We work a lot with our people. We're developing the EQT Academy, and obviously our push for diversity and gender diversity is a big part of our agenda now and going forward. We'll also continue with the high level of hirings that we have now, given the opportunity in the market, and we are expanding our geographic footprint. We are opening both the Paris office and our Sydney office here in Q1. Obviously, we want to make sure that we manage our growth wisely as we have done also in the past.
We go to page six, which is a bit more detail on our activities. On 2019, again, a record year of investments, EUR 11.9 billion. A continued strong investment pace, and that is really the two axes of EQT being local with locals and driving thematic investing through our sector teams as our sourcing efforts are really working very well. Our ratio of deal wins is good when we decide that we want to go after something. We're focusing in private equity, primarily on healthcare, TMT services, and industrial tech. In addition to infrastructure, we have energy and environmental and transport and logistics. In both of the flagship funds, we have quite a few bilateral and proprietary deals, even in this market, which means, again, that the way that we source and find deals is working well. However, the market, of course, is super competitive.
Very high valuations for assets, lots of competition from all kinds of sources, strategic buyers, IPO, and financial buyers. We're focused on situations where we have clear angles, and where we can really add value to the business. We're looking at buy and builds. We're looking at really good companies and strong industries where we can help them accelerate. Given where we are in the cycle, we're looking for non-cyclical businesses. We apply fully our value creation toolbox to everything that we do. We try to shy away from broad auctions. On the financing side, we do spend a lot of work with Jim and our team to make sure that we have long-term, robust financing structures that can, if a storm comes, that can survive a more turbulent time.
In general, we do have plans for all of our companies if a turbulent time would occur. Before I move on, I'd like to mention a couple of deals that I think are quite thematic and interesting. The most recent one, Metlifecare in New Zealand, our first major transaction in Asia-Pacific for some time. This is a EUR 1 billion operator of and developer, actually, of retirement villages providing a continuum of care for seniors in New Zealand. It's a social infrastructure deal proactively sourced by our Asia team who are based in Singapore and now shortly in Sydney. This is really leveraging our thematic approach and our healthcare sector experience as well. On the exit side, we've had quite good activity, like I said, and we've used the relatively good market now to finalize some older funds, such as EQT Greater China II, ended up with quite strong returns.
Also taking care of and exiting some portfolio companies across the group that haven't performed so well. Those are always more difficult to sell, so we're quite happy with that achievement also. One example of a super, actually thematic investment and also exit is AutoStore that we sold in the middle of last year. That's a Norwegian robotic warehouse system. We sold it to another player in the industry who will continue on the growth path of the company. During that ownership, AutoStore was transformed into a global logistics automation leader. We quadrupled sales and EBITDA compared to the time of acquisition, and all that growth was purely organic. Actually, margins also went up during that time. The sourcing of that deal was classic.
These two axes, the Norwegian local team visiting the company up in the fjords of Norway, together with the thematic industrial tech team working together. Those two axes actually made us both win the deal and also help us develop the company. That's actually the fifth-best deal in EQT's history in terms of MOC and the best deal that we've done, the best exit that we've done in the last 10 years. The reason I mention that is that we believe that our approach to the market is working quite well. That's what I wanted to cover on business and investment activities. With those words, I hand over to Kim.
Thank you, Chris. Let me start with a reminder of our business model. I know I've been through this slide before. It's an important one that EQT is a performance-driven firm, which means that everything we do starts with generating good and consistent returns to our fund investors. We are convinced that these good fund returns in turn will drive our assets under management, which as a result will generate income, both management fees and carried interest and investment income to EQT AB. As before, our cost base is mainly people, employees, and other cost-driven by the number of employees. How are we doing on performance? Well, first of all, one quarter is a very short period for our business model. The thematic investment approach that Chris mentioned, our value creation toolbox, our focus on digitalization and sustainability is playing out well.
You can see here on the chart that value creation is good. We continue to develop on plan for all our private equity and infra flagship funds, and even above plan in one of the infra funds in Infra III. AUM increased with 9% in 2019, driven primarily by the Infra IV fundraising, also Ventures II and other funds. We also continued to grow our net invested capital in some of our funds, such as EQT VII, that has continued to make new add-on investments in the post-commitment period. Some of the gross inflow was offset by exits, as Chris mentioned, which reduces the net invested capital. At the end of Q4, AUM stood at EUR 39.9 billion. There were no major movement in AUM in the fourth quarter in that period.
During that period, we did close out the Ventures II fund with approximately EUR 620 million in fee-generating AUM, which was offset by exits, reducing the net invested capital base. On the back of the EQT IX announcement last week, we thought it might be relevant to remind everyone also about how the management fee model works. A few points on page 10. Firstly, when a fund is raised, management fees are charged as a fixed percentage rate on the committed capital. As we've mentioned many times, a successor fund is normally starting to invest when 80%-90% of the predecessor fund is invested. When that successor fund starts to invest, the predecessor will start charging management fees on the net invested capital. That is what is called the step-down. There is not a step-down in the management fee rate.
Over time, as the predecessor fund exits companies, the net invested capital then declines. After 8 to 12 years, the fund is typically terminated. A brief reminder of our carried interest recognition on page 11. The rule of thumb that we have said is that you should expect a fund to start recognizing carry when you have gross MOIC in the region of 1.7x- 1.8x , and you should usually have made a few exits. This would typically be, but there is wide variance, typically be four to six years after the first investment. You can see here that in Q4, our gross MOIC moved up somewhat in the two relevant funds here, which means we are getting close to recognizing carry in EQT VII. We reiterate what I said before, that we do not expect carried interest income in 2019 from that fund.
You can ask why not given the rule of thumb? Well, it's exactly because it is a rule of thumb. It's not an exact science, we are expecting to be in carry recognition mode soon on EQT VII. Moving over to the employee base. We've had a continued growth in employees in 2019, adding about 105 net new employees. As mentioned, FTE Plus is a good indicator of our overall cost base. As Chris said, we will continue to scale and digitalize our business and to pursue growth opportunities. For this year, 2020, we will continue with our high level of hirings given the current opportunities in the market. At the same time, we will ensure to manage our growth properly, of course.
You should expect most likely more net FTEs in 2020 across geographies and investment strategies, and broadly similar growth percentage as in 2019. With that, over to you, Caspar.
Thank you, Kim. As Chris said, we are reviewing the strategic option for our credit business. By means of background, credit has developed well since inception some 10 years ago. It has EUR 3.9 billion in asset under management at year-end, which is roughly 10% of our total AUM, and around 6% of our revenues. The growth prospects are good. However, these growth avenues that we see in credit are in areas that are further away from EQT's core strategy, as illustrated on this graph. When EQT We think that we can make a strong impact and fully utilize the EQT platform, and our USPs, that's where we see the core of our strategy. When we are in less influential and more commoditized products, we see our edge is not as strong. For this reason, we've initiated a review of the future strategic options for credit.
We're still early in this process, and no decision has been taken. However, we have appointed JP Morgan as a financial advisor. In the meanwhile, this is the business as usual during the process. I also think that the decision to review strategic options for credit should be seen in the context of scaling our business. We believe that all our investment strategies, we should operate them at scale. This means we will continue to drive the growth initiatives in ventures with growth, in Public Value, in APAC, and in real estate. In the case of credit, growing this business would be in areas further away from EQT's core. I must also add, with a bit less in common to the rest of EQT, also on the operation side. That's the main drivers for doing this strategic review.
In terms of timing, we aim to have concluded this review before summer. Also to be clear, all options are on the table, including also a sale. That was it on the strategic review. Chris, back to you.
Thank you, Caspar. Final page here, a recap of our financial targets and our dividend policy. These remain unchanged. The first one, having total revenue growth exceeding the private market's long-term growth rates. We talk about that over a fund cycle, so for the long term. Profitability, our target over the long term is an adjusted EBITDA margin of 55%-65%. Our dividend policy is to generate a steadily increasing annual dividend in absolute euro-denominated terms. We do expect the board of directors to propose a dividend of EUR 200 million in respect of fiscal 2019. What we've announced before is that we expect those to be paid in two equal parts here in 2020. With that presentation, I think we are ready to open up for the Q&A.
If you wish to ask a question, please dial zero one on your telephone keypad now to enter the queue. Once your name is announced, you can ask your question. If you find your question is answered before it is your turn to speak, you can dial zero two to cancel. Once again, that is 01 to ask a question, or zero two if you need to cancel. There will be a brief pause now while we register your questions. Our first question comes from the line of Arnaud Giblat of Exane BNP Paribas. Please go ahead, your line is open.
Yeah, good morning. I've got two questions, please. Firstly, on the comment you made about not fundraising two flagship funds at the same time. Do you need to have hit your final close on Fund IX to be able to launch Fund V? You also mentioned that you're looking at options to extend Infrastructure Fund IV. Is it possible to go to the LP to ask for extra commitments in Fund IV? Is that what you're talking about, in effect? My second question is on the strategic review on private credit. You've clearly mentioned that it's not where your focus is, but the outlook is good. I'm just wondering, is the idea that you're trying to get extra bandwidth for management time to focus on the businesses that matter? Are there any other constraining factors that is limiting you when thinking about the business? Thank you.
Thank you. Very good question. Thank you. I'll take the first one and Caspar will take the second one. On the timing, there are lots of contingencies here. Any decision will be dependent on our investment pace. What we do know now is that we're starting the fundraising of, or have started fundraising in EQT IX. What we also say is that we don't have the capacity, and we don't think it's appropriate to try to raise two flagship funds simultaneously, if that were required, if EQT Infrastructure IV continues to invest at this higher pace. Exactly the timing between fundraisers is not something that we have yet deliberated, so I won't be able to comment on that. With regards to the solutions that are out there are actually quite a few. There is the one you mentioned, which is extending the size of the fund with the current LPs.
There's utilizing the secondary market in different ways. There are bridges to the next fund. There are a number of different alternatives, and if we continue with this investment pace at a higher level, we will dig into which one of those solutions is the most appropriate for the fund actually, and thus also for EQT. Obviously, we will keep the market informed if we take any major decisions. Caspar?
Yeah. Addressing your question, I think, first, we haven't concluded on the strategic review. It's still a review, but I think you're spot on in the sense that the way that we think about this and life in general is, of course, that we need to focus our resources, whether it's management time or it's capital, et cetera. We can't do everything, right? Focusing the resources would be one thing that we look into. The other thing is reducing complexity in our business. Of course, if we keep adding products that are different, both from an operational perspective as well as from an investing perspective, that adds to complexity to our business.
Great. Thank you.
Thank you. Our next question comes from the line of Peter Kessiakoff of SEB. Please go ahead. Your line is open.
Yes, good morning. Three questions from my side on the strategic review. The first one is why now? We know that, or going back to the IPO, it was quite clear that this was a niche segment. What's happened now compared to some six months ago, when the IPO process was ongoing, for you to make this decision? Just in terms of a small reminder, are you able to say anything in terms of what the fee model looks like and the fee levels look like in the credit side? Just finally, are there any synergies really with the credits and the other strategies and your operating platform, or is it so that they're closing down and that's pretty much why you're taking this decision?
I think I'll take these questions. Starting with why now, I think it's basically we've come to a position where we have to make some decisions, both on the credit side in terms of strategies and in terms of growth perspectives as well as the rest of EQT. That sort of puts us in a position where we need to make up our mind what we really want to do. That's what's triggered this review. Your second question on the fee model, I think we also covered this in the prospectus in the analyst presentation. I think the fee model for credit is slightly different than for the rest of the firm. It's typically the majority of the products are where the fees are based on deployed rather than committed capital. The sort of revenue curve looks different.
Of course, credit products in general terms have a lower management fee level per AUM, so to speak, which is also then the reason that if you look at our AUM 10% and revenue 6%, that is how the math works. Sorry your last question.
Sure
synergies on the operating platform. I think there is, of course, some similarities, but credit funds are there to some extent, but not as synergetic as the other funds are together. On the front end, it also depends a little bit on the product, but what you can say is that the more commoditized products like CLOs, et cetera, there is very limited synergies with the remaining rest of EQT.
If I may just shoot a follow-up question on the why now, going back to the IPO, I believe one of the areas where you would use your own balance sheet in order to fund new strategies could potentially be CLO, and you mentioned that product in particular. Now you're coming with this strategic review. Is it so that something has changed in the general pricing environment within the credit strategy that there's pricing pressures and so on, which are perhaps making it less attractive?
There's nothing that has happened sort of between then and now in that perspective. I think in general terms where you see a fee pressure in this industry, in general terms, would probably be more in credit than in the others. That hasn't changed from a half year until now. That remains the same. I think we are using the balance sheet to fund our CLO expansion. We are doing what we said that we were going to do. That, again, it puts the finger on, is this the way that we should spend our resources in growing CLOs, which is not a bad business, it's actually a fairly good business, but is it our business? I think that's the big question. I think very relevant questions from you.
Maybe I should add that I think we have a very large strategic agenda with a lot of initiatives and activities. That also puts us a little bit on the spot where we need to make up our mind where we should focus the resources.
All right. Thanks.
Thank you. Our next question comes from the line of Jakob Brink of Nordea. Please go ahead, your line is open.
Thank you, and good morning. Just three quick questions. The first one is on coming back to the business unit credit. How many FTEs are employed in that segment, roughly?
Roughly 40.
Okay. Thank you. Also partly related to what we talked about before, I think, Chris, you mentioned that you did not have the capacity to do fundraising into major funds at one time. Do you maybe consider maybe doing some changes to the way you do fundraising then going forward so that wouldn't happen? Or is this extending EQT Infrastructure IV a good solution or good enough solution? Or how do you look at that?
That's a good question. Given that we have multiple fund strategies, we're always raising several funds at the same time. The one thing that we think is probably not the right use of resources it would be to try to raise two flagship funds at the same time because of the intensity of the effort and the size of the fundraising and just the sheer number of employees globally around the world. That's the decision that we've taken. Yes, your question is right also is that the solutions that are out there, we've used them before even 10 years ago. Those kinds of solutions are relatively straightforward to implement and we think is probably the best way to move this if we get into the situation where we would be needing to fundraise at the same time. We're not yet.
Those solutions are good, and we're quite confident they will work.
Okay, thanks. Then just finally, just so I understand, how would the terms be, let's say you go out and raise new money to Infra IV from not the current LPs, how would the terms be? I guess there must be some way that this is their money, this is their investments, or how would that work?
Yeah. I mentioned three of the solution possibilities earlier in the call. Depending on the timing, the size, and which route we go, there are quite a lot of variables there. I think it's actually too early for me to comment on that at this point in time.
Okay. Thank you.
Thank you. Our next question comes from the line of Patrik Brattelius of ABG. Please go ahead, your line is open.
Hi. Good morning. I have a question regarding the number of FTEs. You said that we can expect more FTEs in absolute numbers in 2020 compared to 2019 here. How is that expected to be divided throughout the year? Is it equally or first or second half? Could you shed some light on that?
It would typically be so that the second half of the year would have more net hires, just because of the way the finance industry work with bonuses, et cetera. That would be typically. Do we have an exact plan per month how it's going to look like? Yes. Is it always going to play out exactly like that? No. That's it.
How is this connected with your strategic overview within the Credit segment? Are you still going to hire within that segment or is that a little bit on hold?
It is business as usual in credit during the strategic review.
Okay. What about the cost per FTE? Has that changed anything? Will that change anything in 2020 compared to 2019?
We're not going to comment on that at this point in time.
Okay. No further question from me then.
Thank you. Our next question comes from the line of Mike Werner at UBS. Please go ahead. Your line is open.
Thank you. Just to get back to the fundraising question with regards to Infra V. I believe given that you closed Infra IV November 2018 and EQT VIII in May of 2018, there might have been a bit of an overlap when you were doing your last round of fundraising for your flagship products. A, I guess, can you confirm that there was an overlap back then? B, was there any specific lesson that you learned, any takeaway, any challenges coming from clients that are impacting your decision to ensure that you're not doing overlaps in terms of fundraising this time around? Thank you.
Actually, there was no overlap. We made the first investment or commitment, actually, to EQT VIII in May or so. The fund was actually closed in February, if I remember correctly. It might have been March, but I think it's February. There was actually no overlap in the fundraising at that point in time. We haven't tried to do this, so we don't have any explicit lessons learned. It's rather, if you can imagine, in both of those flagship funds, we have more than 100 institutional investors globally. Each of those investors need a lot of time, attention, care, information, visits, et cetera, in order to commit their capital to us for the long term, which they are. We really want to respect that.
We want to spend the appropriate time with them, and therefore structure the fundraise so that it's as positive an experience as it can be, even though it's tough for us and it's tough for the clients, actually, these big projects. It's rather that. It's rather our own internal process and our client service mindset that's driving it.
Thank you.
Thank you. Our next question comes from the line of Gurjit Kambo of JP Morgan. Please go ahead. Your line is open.
Just two questions. Hi. Just two questions. Firstly, you obviously had a pick-up in the investments that you've made during 2019 versus 2018. Could you just perhaps give us some color in terms of perhaps the size of the investments? Have you seen a pick-up in the average size of what you're investing in? That's the first one. Secondly, just on the exit environment, any color on where the global investments are being made, whether it's IPOs, whether it's private equity firms or strategic buyers? Thank you.
Yeah. I would say, given that over time we're growing our funds in size. We're doing that, of course, not in the same geographic footprint, not always in the same thematic investment area. In other words, we're expanding both geographically and thematically. There's not a direct correlation between our increasing size and increasing deal size. We have, in 2019, made some very large transactions like Zayo, like Galderma. If you were to look at an average, there is certainly some more equity capital being put to work. Although, as I mentioned before, we've done these kinds of large transactions all the way back since the early 2000s with companies like ISS and Gambro, et cetera. Sorry, what was the second question?
Exit environment.
Just on the exit environment.
Oh, exit environment. Yeah, thanks. The exit environment, it really depends. What we try to do is we try to buy companies that have all three exit alternatives possible. IPO, trade sale, and financial sale. If you look at EQT's portfolio, both on the buy side and on the sell side, we do somewhat less or fewer secondary sales and purchases than others. Last year, we did a number of strategic sales. We did some financial buyer sales, and we also did some IPOs. I would expect that also for this year, where the exit environment continues to be pretty strong, and we have a combination of all those elements this year as well.
Okay. Thank you.
Thank you. Our next question comes from the line of Bruce Hamilton at Morgan Stanley. Please go ahead. Your line is open.
Hi. Morning, guys. Thanks for taking my questions. A couple of follow-ups on sort of fundraising on the credit business. Just to check, given that you've already started fundraising EQT IX, where does this become a crunch point for Infra? I.e., if we were expecting Infra is raised sort of second half 2021, is that kind of doable on the normal fundraising timeline? I'm just trying to suss how big a gap you might have to bridge in timing terms. Secondly, on the credit business, I think you said 6% of revenues at the moment come from this. If we think about, say you were to completely exit, the sort of gap in terms of revenues and profits, would the profits similarly be around kind of 6%?
Linked to that, I guess you've done a really good job with partnerships, Wallenberg, Temasek, and so forth. I know it's very early in the process, but would partnership perhaps be the most likely outcome, or we should think more clean break on the credit business?
Okay, thanks. I'll take the first one. I understand why you're trying to ask the question. You're trying to extrapolate when we would actually be fundraising in fund five. I can't tell you that, obviously. First of all, because it's dependent on us getting to the 80%-90% of the fund committed, which is something that's going to happen at some point in the future. When that happens, we'll evaluate the bridging option if we need it. When we deploy that additional capital, we would go into fundraising. The exact timing is actually, that's just the logic of how it probably will work. Unless there isn't any overlap, we could actually go into fundraising directly. I can't be much more specific.
What I can say is that once we formally start fundraising, as we did last week with EQT IX, our flagship funds, the bulk of the fundraising typically happens in about six to seven months. Not that it necessarily closes that quickly, but that's where the bulk of the work is. Gives you a little bit of a feel for the intensity of it.
Okay, that's helpful. Thanks.
On the credit side, remind me, what was your question?
Sorry. I guess, well, it's twofold. One, and this may be tough, but on the strategic review, I guess, if I look at EQT's business model, you've been very strong on building business through partnerships, Temasek, one of those family connections, and so forth. Is that the natural approach one should expect or rather than a clean exit, was point one. Secondly, on the I guess, if we look at our models and think three years in the future, the quote gap in revenues of you're saying 6%, I think, is the current revenue contribution from credit. Is it similar to profits? If we think about how much you would need to make up through other growth, for example, to meet people's expectations.
I think let's start with the possibility of doing some sort of partnership setup. As I said, I think all options are on the table, and that would be one of them as well. The honest answer is we have not made up our mind what is the best route forward. We haven't made up our mind to find out, and as soon as we think that we have come to that conclusion, we will let you guys know. That is on the table. Let's see. I think if you look on the margin of our Business segment, Credit in the first half was 5% of the divisional EBITDA at a 38% margin. A slightly lower margin than we have on the PE side or the real asset side. That is basically reflecting that it is a slightly different business model with lower fees.
I'm not sure if that answers your question, but that's as far as I can go.
Okay. That's helpful. Thank you.
Thank you. Our final question comes from the line of Roberta De Luca at Goldman Sachs. Please go ahead. Your line is open.
Hi, good morning. The first question is on credit. You said business as usual. Does that mean you still are expecting to launch a CLO with the primary proceeds from the IPO? The second question, still on your strategic review, sorry. At the time of the IPO, I remember you explained to us that the reason for having set up the credit business in the first place was basically mainly a request from clients to have a diversification within your portfolio. Obviously, that's a trend we've seen throughout the market. I wonder how you assess basically this issue in your strategic review. Final question, investments. We've talked, I think, a bit about the size of the investments, but I guess more specifically maybe in Q4, we've seen slightly lower investments. Obviously, it's just one quarter.
There's not much read across probably, but maybe it would be helpful to hear a bit more on the market environment and the trends you've seen and your expectations for this year.
Okay. I'll start with the credit question. Chris can maybe take the investment case. On the CLO side, we are deploying money from the balance sheet to buy the assets to be able to print the first CLO. That is work in progress. As said, we continue with business as usual for credit until we've taken a decision. On your remark on our client's request, I think that's a very valid point. As we've said, I think the synergies on the back end of our business and on the front end are maybe diminishing a little bit. To find out how our clients think about this is also something that we are doing during this review. There has historically been somewhat of a push from them. This market has also evolved. Let's see where we end up here.
I can maybe add to that also, if you look at the CLOs, typically our clients are not investing in the CLO themselves. Back to Caspar's comment on where the credit business is moving, it's also a little bit away from our core LP base. On the market, I wouldn't actually read anything into a one quarter of deals. Of course, we report it because we're required to, but one quarter is a bit short. As you've seen, after the quarter, we announced a number of deals. We announced SHL Medical, we announced Metlifecare, we announced the O2 Power investment in India. Of course, those have been deals that we were working on in Q3 and Q4, but they happened to be finalized here in January.
I think it's better to look on a 12-month basis because then you get some of the seasonality out. On the 12-month basis, I think the market rate, as I said earlier in the call, is still quite good. There is some bifurcation. I would say that for high-quality assets there's a huge amount of interest and competition, both on the buy side and on the sell side. For lower quality assets or more cyclical assets, it's more difficult. It seems though, now, as the world is expecting the low interest rate environment to continue for quite a long time, and the world economy to continue to grow slowly but surely and be a little bit more stable. It may be that some of the more cyclical companies could come back into interest. That is not what EQT focuses on.
That's more from an overall market point of view, what we kind of see is happening out there. We're focusing, as I talked about earlier, very much on our thematic investment strategy and our sectors and our geographies. Okay. Was that the final question, just to see if anyone else added to the list.
Yeah. No further questions at this point.
Okay, very good then. I thank everybody for your participation. Excellent questions. We look forward to talking with you in a few weeks when we come with our financial results. Thank you very much. Have a great day.