Excellent. Good afternoon, everybody, and welcome to EQT. Today we will focus on private markets. We will focus on value creation, and we will focus on governance. We will do this through the lens of our portfolio companies. A larger and larger share of value creation takes place in the private markets. Over the past 20 years, private markets AUM grew by 13x, while the public market AUM grew by 3x. In the U.S., some 85% of the established companies are private, and in Europe, private capital has a key role to play in increasing the region's competitiveness. At the same time, both institutions and private individuals, they are increasing their allocations to private markets, not only for returns, but also for diversification. Today, we will discuss how our ownership model allows us to create alpha.
We will discuss the advantages of having control, how it allows us to take bold decisions, and be nimble. We will discuss how we align incentives and minimize agency costs, and how we take advantage of having long-term capital available to us to drive transformation. We aim to create larger and more profitable companies. Companies that are more resilient, more sustainable, more digital. Well-invested companies that continue to have a runway for growth after our ownership. We call this future-proofing. The best way to illustrate our commitment to future-proofing companies might be to look at some of our public companies that have listed, that have all thrived well after we listed them in the public market, as you'll see on the page. Our ownership model has outperformed public markets over time.
Since the inception of EQT some 30 years ago, all of our substantially realized key funds have delivered at least 2x returns across cycles and across interest rate environments. It is a deal-sourcing and ownership model that cannot be easily replicated. One where culture and experience, resources, ways of sharing knowledge are a critical part of the model, but also relationships, trust, and friendships. Turning to the agenda, we will split the day into two blocks. In the first block, Per, our incoming CEO, will discuss our value creation model in more detail. We will hear about Asia from John and two of our portfolio companies, Nord Anglia and Credila. Next is a panel with our industrial advisors to zoom in on the role of governance and the board in our ownership model. After that, we will take a break and reconvene at 3:00 P.M.
When you will hear more from our private capital platform and the CEOs of IVC Evidensia, WS Audiology, and IFS. We then cover Infrastructure and Reworld. Do stay tuned for the final agenda item of the day, which will be a live discussion on the stage between Conni Jonsson, our Chair and founder, and Bloomberg on the current state of the markets. I dare to say we have representatives from most parts of the financial ecosystem here today, and we'd love for this to be an interactive day and one where we share experiences and challenge each other. I would therefore encourage you all to stay with us after 5:00 P.M. for drinks and some informal discussions. First, let's kick off the day by welcoming our CEO since six years, Christian Sinding.
Thank you, Olof. Great to be here. What a fantastic venue, and we have an amazing crowd with us today. I just wanted to start to say that it's been an incredible privilege and joy to be the CEO of EQT. We've been through a really exciting time during my tenure, taking the company public and really growing and becoming one of the global leaders in the industry. Now, next week, actually, I'm going to be handing the CEO baton to my colleague Per. Per has actually succeeded me before in private equity. I usually say that we've had four generations of private equity leaders, and they keep getting better and better, and Per was the best one ever. Now he's going to be the fourth CEO of EQT, and hopefully he'll also be the best CEO ever. That's the first point.
The second point is actually Per is a great builder of businesses. And some of the businesses you'll see here today are the ones that Per has been part of building. With him taking the reins, I'm super excited to see EQT's continued future growth and development be very, very positive. In addition to that, you'll see that Per has a lot of energy and brings people together in a great way. I'm really excited about today. I'm excited about our transition. Again, warm welcome. Enjoy the day. Thank you.
Thank you, Chris, for those nice words. Thank you for the partnership over the last 18 years. Thank you for a very professional and smooth transition period. I really, really look forward also to continuing our excellent collaboration in your new role. A warm welcome to all of you, also from myself. Very good to see so many of you here today. Under Chris's leadership, and since we got started in 1994, we've built a global leader in active ownership strategies. Today, we have more than EUR 270 billion of AUM. We have a global platform with close to 2,000 employees. Each and every one of those employees is clearly connected to the key elements of our business: deal-making, value creation across everything we do, and excellence in client services.
Every EQTarian is working hard every day to contribute to our mission of creating superior risk-adjusted returns and delivering world-class services to our 1,300 clients. As I'm taking over as the CEO, I'm really incredibly excited about the opportunity ahead. I'm excited about the opportunity for our investors and for our people. How we can continue to strengthen and leverage our global platform, our global insights to help us to continue to identify the most attractive investment opportunities across our target geographies and funds. We have access to an amazing talent pool: our investment organization, our network of advisors, the chairpersons, the leadership teams in our portfolio companies, and some of them you will meet during the course of today. Over the last three decades, we have consistently delivered strong risk-adjusted returns. All key EQT funds have delivered a gross MOIC of more than two times.
Across strategies, on average, we have realized returns of more than two and a half times. How do we keep on creating this alpha? How do we keep on creating those consistent returns across cycles? In my introduction, I will touch on some of the key aspects of our investment approach and our repeatable value creation model. First, how we identify and create the most attractive investments. Second, our ownership model, including our systematic approach to value creation. Third, our risk and portfolio management: how we manage cash flows on behalf of our investors, how we stay disciplined in driving monetizations whilst staying invested in our winners. Starting with our thematic investment approach, we want to be invested with a trend in long-term structural mega themes.
For example, the digitization and AI trends, themes related to an aging population, in particular in the healthcare sector, and of course, the energy transition. In our target sectors, we identify the most attractive subsectors and companies that are likely to benefit from these trends. We are continuously updating and refining our thematic priorities, leveraging insights from our global sector teams, our industrial network, and our digitization and sustainability experts. We combine our deeply specialized sector teams with a strong local presence in our target geographies. This really gives us access to a better deal flow than most of our peers. I think this is particularly true in slower deal-making environments. To illustrate this, in our latest large-cap buyout fund in EQT X, we have done 13 investments so far. We reviewed and tracked more than 600 opportunities.
Out of those, we selected 150 for a more detailed discussion, with 60 of those going to IC, meaning that only around 2% of the opportunities that we reviewed resulted in an actual investment. Our local teams on the ground across Asia and Europe, they help us build long-term relationships with the target companies, with founders, with regulators, and governments. This allows us to identify the most attractive companies and position EQT as a preferred buyer and drive deal flow. This setup has taken us 30 years to build. Of course, it takes big investments, but it is really only working thanks to the strong alignment across EQT around our values. There are regional differences when it comes to our culture, but our values are non-negotiable. It is the values that foster a culture of global teamwork, knowledge sharing, and constant improvement.
All of those are prerequisites for us to be able to successfully apply that global thematic investment approach in a local with local setting. In times of geopolitical and macroeconomic related uncertainties, in times of rapid technological developments, and in an increasingly multipolar world, this is a very attractive proposition to clients and global asset allocators. To be able to create attractive thematic investment opportunities across Asia, Europe, and North America, and help the world's leading private market investors to build the most attractive, resilient, geographically diversified portfolios. At EQT, we want to buy good companies and turn them into great companies. In our target subsectors, we want to invest in market-leading companies with pricing power and strong customer relationships.
We want to invest in downside-protected businesses that have low regulatory and commodity risks in companies where there's an opportunity to drive real transformation based on an active ownership approach and ambitious value creation plans. We often track our companies for years, sometimes actually for decades, and we build strong conviction before we invest. We source opportunities in many different ways. We help founders take their businesses to the next level. Our classified investments in Idealista in Spain being a good example of that. We carve out divisions from corporates as we did in the case of Galderma out of Nestlé. We take public companies private, examples being our recent investment in Japan and the acquisition of Benesse Holding. We use our capital and execution expertise to build out infrastructure platforms, for example, EV charging stations, as in the case of InstaVolt.
Co-investments are an important part of our investment approach and client offering. Since 2019, EQT has facilitated more than EUR 50 billion of co-investments for our clients. This is a strategic tool for us. It allows us to unlock larger deals. It allows us to retain control, and it ensures that we maintain adequate vintage diversification in each of our funds. Importantly, it strengthens the alignment and helps us build deeper, more strategic relationships with some of our most important clients and investors. A great example of a win-win co-investment is Galderma. So far, EQT co-investors have made more than $3 billion in capital gains from that investment. EQT VIII fund investors sit on a gross MOIC of approximately 3.5x . IPO investors are also happy. They have benefited from a 90%+ share price gain since listing.
When we were founded 30 years ago, the idea was to use the network of the Wallenberg family and Investor AB to identify people with relevant industrial expertise that could help EQT in due diligence in developing value creation plans and that could become part of the boards and management teams of the companies we invest in and help us implement our plans. Since then, of course, our ownership model has evolved, but the key elements of our value creation approach remain the same. Today, we've built our own network of advisors, 600 approximately, actually. This is a network that we keep on strengthening. In each portfolio company, we apply the TROIKA model. The TROIKA works alongside the board of directors. It includes the CEO, the chairperson, and the responsible partner from EQT.
The TROIKA is designed to empower the CEO and to help us track progress and drive value creation also in between board meetings. All EQT board members and management teams are required to invest their own capital in the companies that we invest in. This, of course, creates a strong and aligned incentive to deliver on value creation plans. It ensures also the right mindset during due diligence. The board, the chair, the CEO, and the responsible partner, they're continuously evaluated. This is very important because if something is not working in case of underperformance, this allows us to take fact-based decisions and to take action quickly. How does this approach create alpha in practice? For every deal, everything really starts with a Full Potential Plan.
Post an investment, we ask ourselves, if this company had every resource in the world, what could it look like? We then identify three to five value creation levers where our efforts and our capital will yield the maximum impact. Typically, the levers are specific to each subsector and include areas like procurement, talent management, salesforce effectiveness, potential M&A, sometimes subsector-specific AI use cases. You'll shortly hear more about this from some of our portfolio company CEOs and chairs and how this is actually done in real life. This repeatable systematic playbook is something that we've developed over the past 30 years, and we constantly keep on improving it and sharpening it. We know that it's a differentiated model. The results that you see here on the slide, they clearly speak for themselves. The majority of our returns are generated through sales growth and margin improvements.
55%-65% of returns have come from growing sales. We invest in resilient growing industries, and our value creation plans are often geared towards accelerating growth and driving margin expansion. As you just saw, we have more than double-digit sales growth in our portfolio, which means that many businesses actually double in size during our ownership period. In the private equity strategies, margin expansion is often the result of operating leverage and investing in technology to develop more profitable business models, and it's less about focusing on cost cutting. Thanks to this approach, we often see multiple expansions in our investments by the time of exit. This is the part that explains the rest of the value creation sources. The companies that we sell, they're simply better than the ones that we bought, and therefore they also deserve a higher valuation.
Also, in our Infrastructure strategies, the assets that we acquire look very different at the time of our exit. In the case of InstaVolt that I referenced earlier, we acquired a set of EV charge points, and we invested to roll out 10,000 Rapid EV chargers by 2032. Thanks to this active ownership approach within EQT Infrastructure, actually an even larger share of value creation comes from multiple expansion. Infra investors today, they pay a premium for revenue diversification for longer extended contracts, assets with enhanced pricing power, just to give you some examples of levers. Debt repayment contributes only a very small part to the value creation. Our general mindset, I would say, is that we prefer to reinvest excess cash into our businesses to accelerate growth rather than paying dividends to shareholders. The private equity and Infrastructure funds are based on a model with a 10-year life.
This means that most funds will see very different macroeconomic environments and different cycles. Our model and our thematic investment approach is designed to deliver consistent returns across cycles. We're constantly sharpening our capabilities and processes to manage risks in multiple ways. Today, we have a young thematically invested portfolio, nicely diversified across sectors and regions and also vintages. This puts us in a really, really good position. Firstly, being invested in resilient sectors supported by long-term structural trends and themes, being invested in healthcare, technology, digital infrastructure, and the energy and environmental sectors means that we're less exposed to short-term swings in the general macroeconomic environment. Most of these assets that we invest in, they have strong pricing power, meaning that we're able to pass on any cost pressures that we're seeing through price increases.
Across private equity and Infrastructure, the average age of our portfolio is only approximately three and a half years. That means that we're not in a position where we have to monetize investments in unfavorable market conditions. Finally, in a multipolar world, in a world of geopolitical uncertainty, having that type of strong geographic diversification that we have, I believe, is really critical. Our fee-generating AUM is close to EUR 150 billion today, and we have more than EUR 50 billion of dry powder to invest across the globe, leveraging that strong regional presence. As some of you might know here in the room, I really like tennis. In tennis, just like in investing, balancing risk-reward is crucial in order to maximize your chances of winning. A friend of mine who actually used to be a former top 10 player, he had a big serve.
He told me that he was actually measuring the number of double faults that he was hitting per service game. If on average he did not hit at least one double fault, he knew that he was not serving hard enough. Just like in tennis, also in our business, it is really critical that we foster the right risk-on culture. At EQT, we are in the risk-taking business, so we need to take calculated risks to drive outsized returns. From time to time, this means that we will make mistakes. We will hit some double faults, but we just need to make sure that we hit more aces than double faults. 30%-40% of our private equity investments and 15% of our Infrastructure investments have returned more than three times gross MOIC. No guts, no glory, no risk, no top decile fund performance.
We have a world-class in-house capital markets team focused on managing capital structures and portfolio company debt. Our approach is typically to prioritize financial flexibility over maximizing leverage. Having prudent capital structures enables us to implement ambitious value creation plans and really transform our companies. We also make sure to have appropriate capital reserves in our funds to enable us to finance add-on acquisitions with equity capital or support growth investments during our ownership. Our policy is to hedge at least 70% of the interest costs, and we prioritize Covenant Light and long-term financing structures. Only 5% of our portfolio company debt matures before 2028. There is a lot of focus in the industry right now on DPIs. This is something that many LPs and many of our competitors are tracking. Of course, managing cash flows on behalf of clients is a core capability of any private markets investor.
We've kept on investing into our exit capabilities really since we got started 30 years ago. We always keep on sharpening those processes. Post the combination with Jean and BPA, we've made sure to steal with pride from our colleagues in Asia, and we've introduced an exit and liquidity review committee across the entire firm. This is a fund-based committee that regularly reviews exit priorities to maximize fund performance and find the right trade-off between monetizing investments, sending cash back to investors while staying investors with the winners in a fund. In those committee meetings, we discuss and align on the most likely exit routes, how to best leverage relevant in-house expertise. In private equity, 15% of our companies are sold to strategic buyers.
Recent examples being the sale of the life sciences business Aldevron for close to $10 billion to Danaher, and also EQT 8's sale of Dellner to Wabtec for $1 billion. 20%-25% of our private equity investments pursue IPOs, and we have an excellent track record among public equity investors. In fact, today, you will have seen that we published our first IPO report, digging deep into our IPO track record. Yeah, I think the numbers, the facts speak for themselves, so make sure to check this out on our website. We're really proud of the companies that we've brought to the public markets and importantly, how well they have developed post-listing. In the infrastrategies, around 60% of realized assets have been acquired by core or core plus investors, a testament to our ability to create attractive, resilient Infrastructure platforms with downside protection suitable for long-term capital.
Staying invested in long-term winners can have an outsized impact on overall fund performance. In EQT V, we did the analysis post-mortem, and EQT V ended up being a two-times gross MOIC fund. In this fund, we actually had to sell some of our early or some of our winners early on in the life of the fund because we had to send cash back to investors to raise EQT VI. The analysis that we did concluded that if we had held on to one of the early exits in the fund, a company called Securitas Direct, we bought it for $1 billion, sold it for $2.5 billion. Today, it is probably worth $25 billion-$30 billion.
If we held that one investment until the end of the life of the fund, EQT V would have been a 3x fund instead of a 2x gross MOIC fund. In those exit and liquidity review discussions, we make sure to identify those one or two winners in every fund. To manage overall fund exposure, we continue to develop our toolbox and in particular, our private IPO capabilities. You've heard Chris talk about this concept before. This is a concept that allows us to stay invested in those winners whilst offering existing and prospective EQT investors the ability to co-invest with us. Only over the last couple of months, we've announced three huge transactions that have those IPO characteristics, and all of them actually $15 billion+ enterprise value transactions where we raised billions of dollars of new capital, IFS, EdgeConneX, and Nord Anglia.
Jean will shortly talk more about Nord Anglia. This private IPO concept is also a good example of how the private markets keep on evolving and how we at EQT want to continue to stay at the forefront of driving that innovation in our industry. With that, I now hand it over to Jean, who will talk more about our Asia business.
Hi, good afternoon, everyone. I want to speak today about a part of our business, as Per just mentioned, where we think we have outsized opportunities to continue to make big returns for our investors. It is a part of the world where not only do we think the opportunity is exciting, but also where we are highly differentiated as a firm and where we have a very, very strong competitive position. I run our Asia business.
We've been in business for nearly three decades now. We've been operating for 28 years in the region. It's a part of the world where our firm is regarded, I can say immodestly, as the number one firm in Asia. We've distributed back to our investors $26 billion in distributions, which is one of the key metrics that I focus on and that our investors focus on, is how much capital are you actually getting back from this great opportunity that people see in Asia, but how much real returns are you actually generating for investors? We've made over 150 investments. We have 350 people on the ground across eight offices, and we're extremely excited about the opportunity in Asia. One of the things that's happening in the world today is that investors are shifting assets out of the U.S.
We're sensing a massive asset allocation shift away from U.S. assets for political reasons, for institutional integrity reasons, and also because of the returns opportunities relative to what's been happening in the U.S. over the last 10 years and how sustainable that is versus some of the opportunities that we see in Asia. What I'm going to talk a little bit about today, we only have a few minutes to go through this. I'm going to go through it quickly, is why we think Asia has structural alpha, why we think in Asia you can continue to generate this kind of repeatable value creation, this repeatable outperformance that Per was talking about that's really our playbook, why there's such a gap in Asia and why our firm is so well positioned to capitalize on that. This is our track record since inception.
On the left, you see the public market returns, which is 6% compounded over time. We've delivered 20% net of fees and expenses on realized investments and 16% net, including all investments. So 10 percentage points of alpha consistently over time. In the world that we've been living in, say, over the last 10 years, there's been a lot of beta in the market. There's been a lot of public market beta in the U.S. There's been a lot of private market beta in the U.S. markets, and that has resulted in easy money. You can make a lot of money when the markets are going up because all boats are rising with the tide. In Asia, we've not had the same situation.
Some markets have been up, some markets have been choppy, but we've been generating these kind of consistently high returns in markets that haven't had the same kind of public market tailwind. The question that investors are evaluating right now is, in a world where that public market beta may or may not be sustainable or maybe has run its course, if you look at where public markets are today, if you look at the environment today, where can you continue to generate performance, outperformance, and where can you harvest this kind of alpha on a consistent basis over time consistently? This is where we think Asia really offers that kind of an opportunity.
What I want to talk about are the four key reasons why we think there is structural alpha in Asia and why EQT is particularly well positioned to continue to deliver this for our investors. Number one, we have higher growth in Asia. We have higher economic growth rates, which drive higher earnings, which drive higher returns over time. That is about being thematic, as Per outlined in the sectors that we are investing in. We are in the highest growth, most thematic investment areas. Number two, there is just a lot more undermanaged assets in the region. It is still relatively early days in Asia. There are still a lot of family-owned businesses. There are a lot of succession issues. There are a lot of public companies that are not managed for shareholders.
We see a huge pool of assets out there where we can buy them and we can immediately apply our playbook and drive value. Number three relates to the point about distributions. This is increasingly a big point, as everyone in this room probably knows. One of the big challenges facing our industry is the lack of distributions. The question is, where in the world can you find distributions and how do you construct a portfolio that has uncorrelated distribution characteristics to it? If 90% of your assets are invested in the U.S. or in the U.S. and Europe, you're going to have one sort of profile of distribution.
If you diversify your assets, you've got exposure in the U.S., you've got exposure in Europe, and you have exposure to Asia, you have a much more uncorrelated, more diversified pool of liquidity that you can tap into to get those distributions back. Let me just dive into that one a little bit more. In Asia, we've actually had our biggest year ever, our biggest 24 months, our biggest 12 months ever for distributions in our history at a time when globally distributions have been very difficult to come by for investors. We've distributed $17 billion from our portfolio in the last 24 months. One of the big ones you'll hear about today is Nord Anglia Education. Andrew will talk in a moment. In the last 12 months, we've distributed $10 billion, almost $11 billion.
We just did an IPO in India of a company called Sagility, and it's a 5x return, 60% IRR at a time when IPOs are not really happening in the U.S. because the public markets are choppy. It's difficult to take companies public. Here you're seeing, by having exposure to Asia, you're getting distributions, you're getting exposure to this uncorrelated liquidity that we have in the region. The public markets are performing well, which is on the left. On the right, I also want to highlight that the credit markets are also uncorrelated. You have on the top there, you can see the leveraged loan market. This is sort of pre and post-liberation day, pretty stable in terms of the spread, but most importantly, 0% of the deals were withdrawn. In the U.S., at the bottom, you have a totally different scenario.
You had a big spike in spreads, and importantly, you had about a third of the deals actually withdrawn during this volatility. Again, this idea of diversification, of building a portfolio where you have exposure to different parts of the world with different engines driving both growth and liquidity is what investors are interested in and what appeals to them about our products and the diversification of our products at EQT, which can essentially offer people exposure to all of these geographies and all of these thematic trends. The last part of the story around alpha is really this point around the supply-demand imbalance between capital and opportunities. The Asian private equity asset class is an underfunded asset class. It is actually the most interesting part of the world, in my opinion, to be investing in.
It's one of the largest opportunities in the world, but we have the smallest amount of capital flowing into the region. If you look on the left here, you can see the total private equity allocations globally to Asia is about 7% of private equity allocations. We represent about 60% of global growth in our region. We're operating in an environment where we have a very strong competitive position, number one, but we actually do not have that many competitors, number two, because there just is not that much capital flowing into the region. Yes, we have competitors. We have good, strong competitors, but it's a handful of competitors. It's not like the highly competitive, highly intermediate developed markets in the U.S. We have a very different environment in Asia. This is what's appealing to investors right now.
We're seeing more and more investors wanting to get exposure to the region, to get exposure to these kinds of dynamics. The other point about our portfolio construction is that we're trying to maintain a very thematic approach to the way we invest, both in terms of our sectors and also in terms of the portfolio construction. One of the key aspects of our portfolio construction is that we have exposure to the domestic demand, domestic consumption stories in the region. We're not really exposed really at all to the current trade negotiations or trade issues because what we're investing in is really domestic consumption, domestically driven services business, technology businesses, healthcare businesses.
Historically, on the back of this performance that I've been describing that we've been able to deliver, and also on the back of what we're offering investors exposure to, we've been able to attract more and more capital, more and more interest in our funds. The last seven funds that we've raised have consistently grown in size. We've just announced the first closing on our most recent fund. It was publicly announced in our last earnings announcement. We had a $10.5 billion closing on the fund, which is the largest pool of dry capital right now in the region. It's 100% uninvested capital in an environment that's increasingly becoming a buyer's market. Again, we feel like we're in a very strong position to take advantage of the dynamics in the market today.
With that introduction, I want to introduce two of our portfolio companies to give you a sense of what it is we're talking about and the kinds of investments that we make. Nord Anglia Education and Credila are actually somewhat similar in that both are related to education. Education is a big theme for us. It's about aspirational middle-class future growth of demand for education, for financing education, for delivering educational services. Nord Anglia is the largest private education company in the world. When we first invested in it, we were really trying to take advantage of the global footprint that the company had ambitions to develop beyond just Asia, which Andrew will talk about in a moment.
And then Credila is providing financing for aspirational Indian students that want to go abroad to get their graduate degrees and continue to develop their careers and their lives. That business, I do not want to steal your thunder, Arjit, but it did grow at 87% year on year in terms of its net profits this past calendar year and continuing to just show tremendous growth potential. With that, let me hand it over to Andrew, who is going to come up and talk about Nord Anglia Education. Thank you, Andrew.
Thank you, Jean.
I think we are already running a little behind, so I am going to keep this pretty brief, try and give you the elevator pitch on Nord Anglia. I do not know how many people before today would have heard of Nord Anglia Education. A few. There we go. It is a good show of hands.
We're much better known, perhaps, amongst the investment community than with some others. Over the years, we have built what is, as Jean said, the world's most valuable private education organization. The point of the portfolio now, I think, is that it is diversified. It's truly diversified. Not only does that give us some of the advantages that Jean and Per referred to, it also, specifically for us, allows us to tap into high growth markets. When a market is growing, we are not only the best, we believe, in terms of the education operation, we are also very able, because of our scale, to quickly add capacity to a market where we see growth. That's a key advantage we have over our competitors.
This global footprint that we have enables us to spot growth early, move into that growth, and expand while the opportunity is there. You would see this, particularly on the growth chart on the right. I think Jean and I were young men back in 2008, or maybe Jean younger. I think I was already old then. Back in 2008, when EQT Asia first invested in Nord Anglia, we had four schools. Our EBITDA was $15 million. If you remember that for a few slides' time, $15 million, annual $1.5 million annual EBITDA. What I think this slide shows, though, is not just the diversity of Nord Anglia, but its resilience during any exogenous event. We had the global financial crisis. Jean did this deal the week that Lehman was happening.
That certainly got his attention, and he certainly got mine after that, as you can imagine, back in 2008. We went through the global financial crisis. Enrollments did not go back. As you can see, all the way through the oil price crash and even through the COVID pandemic, when at some points all of our schools were physically closed, we were still open, providing education virtually. Even during the COVID pandemic, we maintained enrollments. The real beauty of this story is that we have only just begun. We have only just started to scratch the surface. If you look at that, it is a $120 billion per annum market in our space. We are 1.5% of the market, and we are more than double the size of our nearest competitor. We are very clearly the market leader.
You have a large, growing market. The market itself is growing at 6%. It has a lot of tailwinds. We have a large, growing, fragmented market where we are clearly the market leader, and we should be able to use our advantages as market leader to continue to compound. I want to show you now, because the organization is really about providing a fantastic education to future leaders. I want to show you a really brief video about some of Nord Anglia's schools and some of the future leaders that we are educating. I am going to talk a little bit about, after the video, very quickly on how we are using this market leadership to compound our growth. Okay. How are we using market leadership to further our advantage? Two quick examples here, but these really underpin what we are doing.
On the left hand of the slide, you see we're collaborating with the world's leading education organizations to provide outstanding outcomes for all of our students and all of our stakeholders: MIT, Boston College, Juilliard. As we've heard from Per and Jean, data and digital technology, they're key advantages for us. With the largest operator, we have more data than anyone else. By having common systems, we're able to get insights for our schools that no one else can get. We're able to help our students to learn in ways that our competitors can't. What we're trying to do is provide more advantage from our market-leading position than any of our competitors. Now, that's relatively straightforward when you're a large organization competing against other large organizations who are maybe not as big as you.
When you consider our market, which is mom and pop, it should be straightforward for us to really lean in on these things. Here's the evidence for that. How do we measure that? How do we show that we're doing that? One is persistence. We lose very few parents, 96%+ persistence rate. People, just when they're in our schools, they do not leave. For all of our colleagues, we're giving outstanding professional learning opportunities. In a world where people talk about shortage of teachers, we're getting something like 100 applicants for every vacancy that we have. We're really able to get the best quality and develop those people while they're in with us.
Of course, students, we're not selective on academic outcomes, but we get 40% of our students into the world's top 100 universities, so highly academic results without having a selective intake. Finally, great outcomes for our investors, 24% EBITDA growth. You can see there over the last four years, this is as we came out of COVID. If you look at FY 2025, we're obviously on track to continue that. What are we trying to do as Nord Anglia now? We're trying to continue to take advantage of our market leadership to continue to be a compounder. We think it's a fairly straightforward economic model for us to do that. We grow our top line at 10%. It's a combination of volume, 6%, price of 4%. We have a 50% operational leverage. So 50% of the growth drops through.
That gives us a 15% compounding EBITDA growth. In addition to that, we recycle our spare capital into growth of our own schools and acquisitions. Our average performance is to double the EBITDA of acquisitions four years afterwards. We believe we've got a very solid foundation in a highly fragmented market to be a compounder way beyond our current performance. Thank you very much.
Where do I stand? I think you can see Christian and Jonas on here.
Do you want us?
Oh, if you move over here. If you move there.
Where do you want me?
Hand.
I'm sorry.
This is the most difficult part of the call.
Yeah, we had a plan.
We had a plan.
We have a plan.
We had a plan.
Good.
Great. I hope you can all see us, even in the back, at least hear us. Good afternoon, everyone. My name is Anna Sandel and I'm a partner in the Infrastructure platform. I'm also heading up our investment team in INFRA in London. Together with Christian, we will cover the two important topics of governance and value creation. As Jean excellently said, the governance is really critical to get right from the start. Christian is not just a colleague in the London office, but also a senior partner in the private capital funds and also responsible for performance in North America and Europe. As you've heard earlier today, we create value through active ownership strategies together with the governance model and together with the mindset of building, developing, and future-proofing companies.
We will, together with the panelists today here, show you some examples and share some examples of how we do this in practice in our portfolio companies. Here today, we have the panel with Dorothy, Jonas, and Kate, all senior executives before joining us in the boards of our portfolio companies with a wide range of experience from executive roles and functions from their respective sectors spanning from energy, software, and services. I'll hand over to you to more of an introduction. Dorothy, maybe you can start.
I come from the electricity sector. I spent over 25 years in the electricity industry. In my last 12 years, I was CEO of a U.K. power company, which did retail and generation called Drax. I've got extensive board experience. Probably the most unusual thing is I spent eight years on the board of our central bank, the Bank of England.
Wow. I go after. You're not passionate. I spend about 70% of my time with EQT, helping out on software and technology, and Chairman of the Board of three of EQT companies. When I do not do EQT, I spend time on theory and software on quantum computing. Basically, the software layer and the vertical and horizontal application of next generational quantum. I spent 20 years at Microsoft, primarily in software development and running product groups and developer and platforms group worldwide before coming back to Sweden for family reasons. I became the CEO of Microsoft Sweden for a number of years before I found the bright light of EQT. I still spend my time with Microsoft and EQT.
Hi, I'm Kate. My executive career was virtually all in public markets. I did the turnaround at WH Smith, big legacy retailer in the U.K. Turned out to be one of the surprising winners. That's just after that. That's when I bumped into EQT. They recruited me to be CEO of a business that wasn't doing the best at the time, SSP. We turned that around. In fact, Per recruited me. They turned that around within a year, floated it, and I was back in the public markets again for another six years. I now work mostly for EQT, but some others as well, as a chair of a number of businesses. You might think that's an unusual portfolio. I'll explain why that works in a little while.
I think we have a fantastic panel here today. We will start by exploring how creating an optimal governance structure forms a cornerstone of how EQT creates value. Each of you has a lot of experience in other boards, but predominantly in EQT boards. I am very happy that you are helping us dig into that a bit deeper today. Maybe to start, when EQT acquires a company, how do we establish effective governance from day one? Maybe to add to that, how do your governance priorities evolve throughout the ownership journey? Kate, maybe you want to kick that off.
I certainly will. I would say do not think about governance in terms of ticking boxes, et cetera. Governance for EQT is about the way they run the businesses, how they create value. I think that starts, in my experience, from when they start looking at a business and doing the DD. They get together through their huge network, or indeed others, a group of people like me, as well as the deal team. We start looking at the business, building a case in terms of where we think we can add value. As you come through that, you start then to look at, OK, how is the board going to be set up? The board with EQT is always chaired by an independent like me and always has a larger number of industrial advisors than it does of a deal team on the board.
I think that gives EQT and the business some real benefits. I mean, quite often, and Dorothy was saying, you look around at the board and the people on the board. Quite often, I think, oh my goodness, I'm going to have to up my game because they're really impressive. I think the way EQT runs their businesses attracts people like me because you can really add value to the management team and to driving the value creation plan. You might look at my portfolio and think, well, what have those got to do with each other, if you like? I think in constructing the board, you will take a group of senior advisors for that board, and you'll get a real mixture.
Some of them will be from the sector, and some of them, based on your value creation plan, will be experienced in those levers. For example, IVC Evidensia and Beijer Ref, you think, what's refrigeration and air conditioning distribution got to do with vets? Actually, a lot of the value creation levers are the same. Consolidation, M&A, typically small M&A and integrating that, working out what you bring to the center and what you leave within the regions and within the businesses. You get a really strong board with a mixture of the sector expertise, the specific expertise, and the levers expertise that enable you to drive value creation. Coming through that, you then work with the management team to create what Per said is either the Full Potential Plan. That is, how great could this business be?
Once you've established that and worked out what your, and you've got a lot of it from the DD, what your big bets are going to be, you then start, obviously, to work through delivering those. That is where I think the TROIKA really comes into its own. I have sat on the TROIKA as a CEO, and I have sat on the TROIKA as a chair. What it means as a CEO is you have weekly access to people who own your business. You have weekly access, and often more than that, I am sure Simon will tell you, as I am his chair in IVC Evidensia, to people like me who have pretty much done those things before and had those experiences. You can access, on a really frequent basis, your owners and people who have been through the same loop that you are going through.
I think that really helps to build alignment. It really helps to drive performance. From a CEO's point of view, you can make quick decisions flexibly. I would also say it's quite a live process, the whole FPP and TROIKA. Markets change, and sometimes you need to change your priorities. The frequent access and the alignment that you build enable you to do that. A really good example, I would say of that, is the board is not set in stone. As Per mentioned, everything is constantly reviewed. One of EQT's favorite phrases is everything can always be improved all the time. I think as the market changes, quite often you choose to change some of the board members because you think, actually, we're going to defocus that lever, but we need some expertise here. We certainly did that with the management team, IVC Evidensia.
I think I've sat on the board nine years, and we're now on our third CEO. That was planned because it started with 300 clinics. We're now 3,000, the number two globally. You need a different CEO for those parts of the journey. You can do that very effectively and in a very constructive way where both the board and the management team think about that as passing the baton on to the runner who is most suited to the next part of the journey. I think the way that EQT think about running their businesses, using the best expertise of people like Dorothy and Jonas, really enables value creation to be driven through the management teams really effectively.
Do you want to add something? I mean.
You want me to add?
Why don't you start?
I think you covered it basically 100%, right? Maybe if I just summarize my experience and then very quickly, right? What EQT is really, really good at, in my perspective, is that they manage to stay close to the portfolio company without interfering in the business. I have been on a bunch of external boards, and we have boards who are either very far away, hands-off, they are high-flying. Sometimes they ask for an Excel spreadsheet, and that is fine. There are other boards who basically tell the CEO what to do, when to do it, and how to do it. They transfer accountability from the leadership team to the board. They basically run the business, right?
EQT's got this intrinsically good model where there are very strong industrial advisors who know their role and their value add and where they're supposed to stay to coach, guide, lead, challenge, inspect the leadership team, but they never tell the team exactly what to do, which means that we get this great dynamic in the board, and it's clear what the partner is doing, what the chairman is doing, and what the board is doing, right? I think that's unique. I promised myself when I worked several years ago, I would never go and work with a private equity company just because of that kind of dynamic. I'm not saying that.
I want to do that, Joe.
I'm not saying that because I want to be disrespectful. It's just because I'm an operator, right? Meeting EQT for the first time, I saw that, hey, this is the best of worlds, and I think that's unique in their governance, right? Just finally, my job is very clear. I need to hire the best CEO for the business. That's my number one priority. My second priority in governance is to make sure we unlock the potential of each of the board members so they can make the CEO empowered to go and execute, right? I think that's fundamental in the EQT governance and something I really appreciate.
I've only got a little bit to add to all that. Firstly, actually, the reason why I joined EQT as an advisor, and I've only been an advisor three and a half years, something like that, is I did talk to a lot of other firms. What came through to me was really good culture, really good ethical culture. Something I truly believe in for the sort of businesses I'm involved in, industrial, is you need really good operations, and you need really good management and good strategy. Those two, operations and management, some companies do not respect that enough and are not dynamic enough about it, are not willing to change soon enough. It really, really does underpin every EQT investment.
The other thing we haven't really talked about, in the background, there's always the EQT team that if the company has a gap, I mean, one of the companies that I work with basically wasn't brilliant at cybersecurity when EQT. Immediately, EQT came in, helped with cybersecurity, put them on the right path, gave them the right tools. Now they're doing exceptionally well. There's also that assistance in the background, which is very important because some of these companies aren't that big when EQT first acquires them.
Absolutely. On the TROIKA side, how's that experience been?
I really like the TROIKA. I actually also chair a listed company. To be honest, I almost copy it. Anyway, I do not have the investor there. That routine, the discipline of having regular meetings, talking about the issues, also talking about what you want to bring to the board and what you think is important for the board to hear or not, I think it is very good.
Good.
I think that TROIKA, just if I may add, right, it's important not to transfer accountability and decision-making from the board to the TROIKA. EQT is also very clear what the TROIKA is doing and what the TROIKA is not doing. I think they've been very successful in separating those things so the board does not feel that, hey, they're not empowered anymore to do things, right? I think that worked very well.
I think that's a very important point. Now, you already touched upon a bit how other boards can be. And you've been Bank of England. You don't need to be specific on this later. But you've been on public boards, perhaps on some family company boards, and God forbid, also on boards of other private equity firms. If you then look at sort of what's really distinct on top of that, where you say, OK, this is really why EQT's model is so unique in driving value creation and where then some other differences. I think there's some noise up there. I don't know. Maybe we can shut down the guys in the restaurant. OK. Shall we?
I think that's quite a challenging one. I mean, I think you've got the advantage that you've got, in reality, a more agile investor than you have with a listed company. You have to move the market with a listed company. You want a board that can fit with that. In my experience, the EQT boards are smaller than public boards. I think small boards are easier and quicker to make decisions. I'd say, if I'm really honest, I think you can get some excellent people on public boards as well. I think it's about getting the right people around the table. Those are the two big differences I see.
Yeah.
I think you touched upon it, right? When you sit in a board and you have these experts, like really, really deep in their segment, if it's software, finance, go-to-market, whatever it is, it's like a humbling experience. When you get that board to really operate and understand the roles and responsibility, I've not experienced that anywhere else, kind of the quality of the people and their ability to understand their role in value creation and running the company, right? I think that's unique from my perspective. You talk.
I think you get your money's worth as well, would be my view. You don't sit on an EQT board if you're there for the lunch or the networking. You sit on the EQT board because they expect you to bring something. That's why I think people like us really like that because we're not terribly interested in the networking or the lunch. The EQT board enables you to do that. We've all built up bucket loads of experience and fallen into bucket loads of bear traps, which it's really great to be able to share. This is a place where you can do that. As you say, Jonas, it's absolutely clear that the CEO runs the business. You are there to challenge, to support, et cetera, alongside the EQT partners. They run the business, and everybody's very clear about who does what.
Yeah. As you mentioned, we spend a lot of time making sure that each of the board members is really suited and delivers value. We have our annual board review, based on which we can make adjustments if we think we can improve it.
Perfect.
That's a bit around how we set up the governance to drive value creation.
I think when we have now set the foundation with the governance, which is really an important thing to get right when you come into a new investment, let's turn then to what ultimately drives the returns, the magic, the value creation. You have all been part of this in several different functions and roles in different boards. We at EQT, we have developed over the time a very sophisticated value creation toolbox and strategies for active ownership model that spans across different sectors, geographies, and company life stages. Let's try to demystify that with a couple of good examples. We already heard a few from Andrew with Nord and the other businesses. Maybe, Jonas, you can start with sharing a couple of examples on transformative value creation initiatives that you've either seen through the Full Potential Plan process or other initiatives in the investments.
Sure. I'll try to tell you a brief story about IFS. IFS was this company that EQT discovered. They saw this as a potential diamond, right? It's an ERP company. Most people haven't heard about it. The people who have heard about it think it's pretty boring. Nobody likes ERP, but they saw that this has something in it, right? It's enterprise software. This partner at EQT, Johannes Reischel, came to me and said, hey, you need to kind of work on this. I said, no, it's boring. It's like everything is cloud. They really were persistent and said, there's value in this, right? We kicked it off and started the value creation process. We did that by assembling really good industrial advisors that was enabled by a lot of data that the EQT team brought us.
We sat down with data, the leadership team, and industrial advisors. We said, OK, if we have the ability to invest, what can we do? You're a cash-strapped company today. You can't invest. You run it like every quarter. What can we actually do? The company never had access to that type of data, that level of data. They start diving in and see, OK, hey, there are opportunities for operational-led growth, for product-led growth. Some of the operational-led growth, we don't have to invest a lot, but it's a lot of returns. The product-led growth, hey, there are options for M&A, but also how to evolve the product. We had a very long and thoughtful process about, OK, where do we want to be in a number of years? We realized, hey, it's much more than ERP.
We can actually be the leader in field service management, in enterprise asset management. Software will eat the world. Every company will be a software company. At the core nucleus of all companies will be enterprise software. We said, hey, we have to have a point of view how the future looks like. We put these levers in place, all backed on data. Finally, the most important part of this whole value creation journey on process and data and assumptions and levers, then came people, right? For me, that's the most important value creation lever in all companies, right? We realized, OK, we're here today. We're going to go and execute on the value creation plan. Here is the people capability we need. We don't have it. OK. We have to find the right leadership.
We hired a first-time CEO, brought him into the business, and then really empowered him to go and run with the business around this value creation story, right? He took it. He ran with it. As a chairman, you have to be prepared when the CEO says, hey, Jonas, I hear all your fancy ideas. I believe like a nine out of 10, but I'm not going to do everything you say. You have to be comfortable as a chair to say, fine, let him run with it. That turned out to be very, very successful because he also put rigor and reporting around this value creation so we could track it exceptionally well to make sure we got return on investment.
This other company, and then I'll wrap up, is that his time came, and then he handed over to another CEO who now took IFS to an even higher level based on the same principles. I think we have Mark Moffat here today, who's an exceptionally good CEO for IFS. He can tell you about the business, right? That summarizes two years of process and value creation that we try to apply the same across all our software assets. That makes sense.
Dora, you sit on two of our Infrastructure investments, Oterra and InstaVolt. Can you share some examples from them and also how important the CapEx investments are in getting those right?
OK. Maybe if I start with an overview. I sat on two companies. You've heard a bit about InstaVolt because Per mentioned it. InstaVolt is building out fast charging networks for electric vehicles. What Oterra is doing is a bit complex. You call it electricity storage, but essentially, it's fast response facilities when there's a big change in electricity generation or demand. That's become absolutely critical to keeping an electricity system stable because we have more and more intermittent renewables, which can suddenly drop or lift up in generation. We recently saw a good example in Spain and Portugal. Both of them, the investment proposition was about sustainable growth at attractive margins. Actually, they're doing very well, both of them, in doing it. It's also the way you do it, the value levers. I was thinking about it. They're engineering expertise and innovation.
It's about having a really focused commercial strategy that's not just about attractive margins, but margins that you can sustain. They each do it in a different way. The third one, because these are about growth in capital equipment, is having a really good supply chain and using that energy expertise and innovation to actually innovate what you get from that supply chain and what you build. InstaVolt has just done the most brilliant thing. They have opened a new, what they call, hub site. It has 40 very large fast chargers. It also has a complete set of solar panels that can meet the electricity requirement of those fast chargers. In addition, it has a battery that can store any excess generation they have from the solar panels if they happen not to be using all the fast chargers at full capacity.
What that means is two things. In the value creation plan, and we worked on it together, one of the things we realized very quickly is that we need to be able to do flexible and dynamic pricing. This gives us so much pricing opportunity because we're not dependent on the electricity we get from the grid and the time of day of that electricity. We can use the solar generation. We can get cheap electricity at night and fill up the battery. We can charge the vehicles with that. On top of all this, what I have not yet mentioned is that sounds really simple. I promise you, in engineering and software terms, linking batteries, high-voltage chargers, and solar panels with the grid is incredibly complex.
In fact, we think we're the first, we're definitely the first in the U.K. and probably the first in the U.K. to do so in a way that you don't trip the whole system. It is reliable and effective. We've got great pricing, haven't we?
Absolutely. No, it's a great example. We've heard a bit about inorganic growth also with Nord. Maybe, Kate, you have a couple of other examples of M&A investments.
Yeah, will do. I won't talk about IVC because you're going to hear from our outstanding CEO in a minute on IVC. I'll talk about Beijer Ref. I started Beijer Ref doing the due diligences. And it was a publicly listed company. It still is a publicly listed company in Sweden. I'm sure at the time I said, I keep telling you, handbags and shoes, this is refrigeration and air conditioning parts. It was one of those businesses that had performed super well. As we went through the DD and the management presentation, I got hooked onto the, wow, it's performed really well, but there's such an opportunity. I think it's an interesting one because it had done well in the public markets, but it has now done that post-EQT's investment.
One of the number of areas of the value creation plan, M&A was quite a big one. It's a very fragmented market. And it's typically not very sophisticated with relatively low-quality management. So bringing in very high-quality management and driving some consolidation has created more than half of the value that we've created in that business, which is very substantial. Previously, they'd done some M&A. But the regional CEOs did the M&A on a reactive basis when they had a bit of time. Yet, as part of the Full Potential Plan, it was quite clear this was going to be a huge lever. I encouraged the team, rather than to have the field CEOs do M&A when they had a bit of time or if somebody wrote into them, that we were going to take a much more strategic approach.
We centralized that function, still used the field to identify some opportunities, but created a centralized function, looked at what would we actually like to acquire as opposed to those people that happened to write in to say, would you like to buy my business, where we'd like to acquire it, over what time frame, as well as, and when we do acquire it, what capability that will we add to that so that we do not just get the multiple arbitrage, but we can layer on, in this case, access to own label and OEM, drive green product, look at best practice in running branches, drive up margin through our centralized procurement. Through that approach, we have over-troubled the M&A. There is still considerably more to go.
Do we have time for one more question? I mean, you can answer it maybe one or two sentences. How do you think value creation will change in the future? You want to go.
I've spoken so much, so please. Fire away.
Do you want to drop in AI?
I was going to say that. As a chairman, you have to resist the urge to speak all the time.
I think one of the things I really like about working with EQT is you're constantly encouraging the businesses to look further, to try newer, to take some more measured risk. AI and digitization is a big theme, I think, in all of those businesses, certainly all the ones that I work in. Whilst I think the processes will be fundamentally the same, I think EQT is extremely supportive of trying new areas and being at the forefront in a controlled way and trying to lead within that sector.
I'm glad you said that because when I thought about it, when I was going through my head, I was thinking, oh, it must change, it must change. I found myself thinking, I think probably value creation and the value levers are consistent. What changes is the tools you might have to use to deliver that value.
Yeah.
May I say something provocative?
Yeah.
Yes.
We've now given you the thinking time.
You read people very well. I need to learn and then say something smart in the end. I think that we're very data-driven. EQT is very data-driven, right? I really appreciate and respect how they base their conclusion on data. They add that with innovation and risk. That becomes kind of really, really good, right? Everything is going to get automated by AI. All the models, all the analysis, all the numbers, all the conclusions, all that stuff, completely automated. I think value creation will pivot more towards those models, but then people capabilities. Today, yes, we look at people capabilities, but people is going to be an even bigger part of the value creation going forward when so much insights are getting automated by small language models, large language models, what have you, right? A bit of provocative.
We didn't rehearse this, Christian and Anna, but I think that will happen in the future.
Neither the rest. I think it's an important point. The people point actually circles back then to the discussion we had. We covered governance, which is really a key driver and a cornerstone of how EQT sets the businesses up for the best possible performance with the board, with the TROIKA and elements like that. We covered a few areas and a few methods of value creation. We make massive capital investments. We drive innovation in a big way. We've heard some stories about transforming businesses through M&A and through major transactions over time. That whole constellation, for me, it's a little machine that we keep tinkering with, that we constantly try to improve. Indeed, new tools, new methods in order to get better and create more value.
I don't know, Olof, whether we have a chance for any question from the audience, but you look a bit confused.
You look like a no.
Yeah, it looks like a no, Olof.
I'm a big coffee drinker. The question is between the coffee and not. Of course, if we have any questions from the audience, we'd love to take one. Magnus, please.
Yes, hi. Magnus Andersson at ABG. I just had one question regarding governance and leadership across the fund cycle. I know that four of the companies here, I know that four of the companies on the slide are in EQT VII, which is a fund that turns 10 years now, which probably means that those companies know that the fund is about to be terminated within, best case, a year or maximum two years. How do you prepare the companies for this exit phase? How does that work?
Want to take that?
Sure. I mean, we start preparing companies for the exit, I would almost say, before we make an acquisition. Because that is always what we have in mind when we develop a business plan. What will this company look like? What are we striving for by the time that we sell the business? That means that we set up the governance for that. If we would sell the company or IPO a business, we would make sure that we set up the board a year, year and a half in advance, have all the committees perfectly in order for a public situation. We constantly update our business plan, make sure we have a clear story for the next five years in any case. Of course, there are constant dialogues by deal team members with potential buyers, with intermediaries, et cetera, et cetera.
That is a constant process. We have in mind, we obviously look at what is a good time for an exit. Generally, even in the older funds, we make sure that we create sufficient time and space to find a good timing for the exits. As you know, when we IPO a business, we will be in those companies still for a few years. It is something that is on our mind throughout the ownership period.
My name is Bert Janssens. I was recently appointed as co-head of Private Capital Europe and North America. That is our strategy that would score our flagship fund, which is EQT's original and longest-standing strategy, established in 1994. We have a truly differentiated and integrated platform built to reflect our leadership in our core sectors that are healthcare and tech. In these sectors, we invest all the way from early stage to mature companies. Our latest addition in that is healthcare growth, which sits in between our early stage life sciences strategies and our mature buyout strategies. Last year, we actually raised the largest buyout fund that year with EQT X. We reached our hard cap, and the total commitments was EUR 22.1 billion. EQT Future that same year also closed at EUR 3 billion, making it the largest first-time fund ever raised by EQT.
Thanks to that differentiated platform, we have a strong track record, as you also heard from Per. The returns you can see on this slide. We continue to deliver very attractive returns and top quartile DPIs to our investors. We focus on investing in attractive sectors and subsectors in healthcare technology, as well as industrial technology and services. By having the early stage strategies and driving the collaboration between those different strategies and across our platform, we are in a very strong position to identify the trends ahead of the competition and to stay invested in the most attractive teams, such as the ones you can see here on the page. They are the subsectors that we actually cover in our flagship buyout funds.
Today, I'm very proud to have the CEOs of IVC Evidensia, WS Audiology, and IFS here to represent Private Capital Europe and North America and tell their stories about the company's value creation journeys. This is probably what you've been waiting for. First up will be IVC Evidensia. When we first entered the space a decade ago now, the market was vastly different. It was fragmented, and it was dominated by independently run clinics. We had a vision, and the vision was clear: to professionalize a highly fragmented market, increase the value for pet owners, and develop a leading provider within veterinary services. We had a strong healthcare and services track record to do that with relevant investment experience, and we went on our journey. Sweden featured the right dynamics in the sector and was an important starting point for us in this journey.
From there, actually, a very important and big step in the journey was the merger with the U.K.-based business called IVC in 2017. The platform extension created the need and the opportunity to strengthen the board and upgrade our governance structure. You have already gotten to know IVC's Chair, Kate Swann, earlier today. She participated in the panel, but you will soon hear from the person who made it happen, the CEO, Simon. Thanks to the excellent operational execution on the back of long-term growth trends such as increased pet ownership, the advancements in veterinary medicine, and the humanization of pets, IVC Evidensia has become one of the leading veterinary care providers in the U.K., Europe, and Canada. Today, EQT is one of the leading global animal health investors, having invested in, for example, VetPartners in APAC, Dechra Pharmaceuticals, also in the U.K., and zooplus and ManyPets.
Secondly, we've got WS Audiology here today. This is the global leader in hearing aids. WS Audiology was formed through the merger with Widex, which was a family-owned business, and Sivantos, that we acquired in 2015. The merger happened in 2019 and created this unique company. The merger also created significant synergies, combining two leading companies. We formed a robust and strong R&D team and a very comprehensive product spectrum in the hearing aids market. WSA operates in a highly attractive market with healthy non-cyclical growth driven by a growing addressable population. As we all know, the world is getting older, and that is actually a massive tailwind for this business. Ian will talk about that in a lot more detail and color later. Lastly, we've got IFS. You also heard a little bit about that earlier today.
IFS is a global enterprise software leader focused on asset and service-centric businesses. In 2016, IFS was listed on the London Stock Exchange when EQT VII took it private. I think it was for less than $1 billion at that point in time. Our vision was to create a challenger in the ERP space, a space dominated by giants, as you all know. We partner with IFS to drive rapid growth, digital innovation, and also M&A. We helped transform the business into one of the fastest-growing software-as-a-service companies in this segment today. EQT and the other shareholders brought in new minority investors in a stake sale very recently, valuing IFS at EUR 15 billion. Mark will tell you all about the IFS growth journey in a moment after Simon and Ian have presented. With that, I would like to welcome Simon Smith, CEO of IVC Evidensia, to the stage.
The world of pets. How many of you in this room, by a show of hands, has a pet, please? Lots of potential customers for me then. Excellent. Hopefully, you'll find this interesting. I've been at the business for around three and a half years, and I wanted to spend about 10 minutes or so talking to you today about how we are building the global leading veterinary care platform, really to grow our business in what is a growing sector. Everything that we do at IVC Evidensia is rooted in animal health and welfare, guided by our purpose of healthy animals, happy owners, our people, customer, sustainability promises, and our values. In fact, by the time I finish this presentation, we would have looked after hundreds of animals. We care for 10 million pets a year, with 39,000 clinicians treating those pets each and every year.
We have around 90% of our business in our integrated veterinary service market, which is basically first opinion clinics, referral centers, advanced hospitals. We have around 10% of our business that comes through e-commerce and subscriptions. What sets us apart is how we do our work. It is a combination, really, of three things: financial discipline, operational rigor, supported by a very clear clinical growth strategy. It starts with culture, a very strong clinical culture with a commitment to our people, supported by a strong and experienced leadership team, a leadership team that is experienced in growing organically and through M&A. Through our core services, we empower our teams to clinically lead each and every clinic, while centrally we invest in the tools, the facilities, the systems, and the processes to really help increase the amount of animal care time available at our clinics.
We focus on clinical talent and a genuine employer of choice. That is super important because vets can choose where and when to work in a restricted market. When those vets and clinics join our network, it is because we have a commitment to clinical independence, but with a full service of operational support and, of course, being part of a wider network so they get the support and training they need, and they focus on the animal care that they love to give. The veterinary market is resilient, demonstrating consistent growth of between 4%-6% for decades, year after year. That has been driven by a number of things, primarily the humanization of pets, the steady increase in pet ownership and in cutting clinical-edge treatments, and, of course, better awareness of preventative treatments and emergency care choices.
You can see on here during the pandemic that the veterinary market saw a spike in demand from those very predictable 4%-6% year after year to around 8% as people brought new pets, particularly dogs, in lockdowns. That created a pull-forward effect in ownership, combined with the extra sales from early life cycle sales from puppies and kittens. Now, as we go through the post-COVID cycle, everything is correcting with lower levels of growth. However, we expect long-term trends of mid-single-digit growth to return in the next couple of years, and, of course, alongside the benefit of later life cycle sales from the older-aged COVID dogs that will hit middle age in about a year's time. Whilst the market normalizes, which it will, customers' expectations continue to rise, and there are plenty of growth opportunities.
Ongoing investments in clinical capabilities, our shared platforms, our people, as well as our clinical strategy, which really starts with improving preventative care, puts us in a very strong position to lead the market as it grows. It is basically all about modernizing our industry to turn it into one that is a proactive, customer-centric experience, clinically and data-driven and tech-enabled. More on that in a minute. Whilst we are growing our business, we are already well set up for growth with the number one vet care platform across Europe, the U.K., and Canada, and the number two globally. We are also around three times the scale of our competitors in many of the markets that we operate in. Of course, that scale does give us significant advantage.
We have the local density in our markets, which creates an operational network, making it easier for us to hire vets with the flexibility to deploy them through our network. We use our scale to deliver best-in-class procurement terms alongside corporate synergies. We use our data and technology to deliver profitable growth and a better experience for our customers. Of course, our scale gives us access to the best talent and also gives us access to the best selective M&A. That growth has been substantial, more than 25x over the past 10 years. There are really three phases to that growth, which Kate outlined actually earlier.
The first one is up to 2017, and that's as the business focused on forming its foundations, building trust with the practice teams, improving clinical quality, leveraging scale, basically laying the groundwork for further integration and margin growth. We then went through our rapid expansion phase from 2018 to around 2021. That growth was both driven by the spike in pet ownership, which I talked about earlier, alongside a terrific and accelerated M&A program across the U.K. and Europe and our merger with VetStrategy in Canada. In parallel, we began to support our Infrastructure. We invested in facilities, clinical salaries, and standards. We have really set the foundation and started to expand. Since I joined at the beginning of 2022, we really entered a new phase. It is about bringing all that together into one bigger business.
On top of our clinic organic strategy, we started to invest in our platforms globally, testing digital tools, really improving decision-making through data and the overall customer experience, fundamentally building a platform for long-term growth, for long-term compounding benefits from a well-invested platform. Let me just give you a few examples of what I'm talking about. It obviously starts with superior clinical care. It's core to all that we do. We are one of a handful of vet companies that has insourced all of our clinical and leadership training. We've done that by investing in top-quality vet training centers at our specialist hospitals that we put all of our teams through internally. We are the only vet business that then provides our vets with research-based clinical care frameworks that our vets use with all of our customers to ensure the highest standard of care.
Of course, they're updated with new technology and modern practices. This is then supported by state-of-the-art equipment and some of the most experienced doctors in the industry. The speed that we are able to diagnose and treat animals is truly unbelievable, in fact, often faster than the equivalent in human health. We are able to see a dog on a Monday morning, diagnose, have that dog in for care. It could be cancer care. It could be a heart condition within 24 hours of seeing it. It is truly a modern and fast-paced industry. On top of that, we have a robust and proven M&A playbook from financial evaluation to operational integration. We've basically bought and integrated 800 clinics since 2020, which is around two to three every single week since 2020, diversifying from 12 to 19 countries and creating market-leading positions in the countries that we've opened.
Our customer value proposition is designed to cover the full suite of products and services, really to cover the whole pet ecosystem. We deliberately focus on first opinion GP sites to really create that trust and bonded life cycle relationship with our customers. We move on to specialist referral sites, i.e., pharmacy offer, and, of course, things like our pet subscription offers, Pet Health Club, for example, in the U.K., where we have one million customers on an annual subscription plan with us, focusing on preventative care. On top of that, we've developed a commercial engine and a blueprint for our clinics that is designed to deliver outstanding care and long-term animal health by proactively driving demand into our clinics.
That starts with an integrated CRM platform so that we can communicate our campaigns and individual care plans, such as wellness tests for older dogs and cats, really promoting the benefits of those through emails and texts, educational videos, prompts to get our customers to come in and see us more frequently. If that does not work, we then have set up all over the world clinically supported call centers in the U.K., Europe, and Canada. Their job is to phone every single customer and get them booked in for their preventative care treatment, whether that be vaccinations, dentistry, the wellness test I have just mentioned, and many, many more. They are able to access every single individual system in each clinic. From a customer's perspective, it feels like they are being contacted by the clinic.
They are able to book the appointment at the individual clinic, and we then follow up with every single appointment they need thereafter. We are getting a 20%-30% conversion rate on all of those calls, having warmed those customers up through the CRM campaign that I just spoke about. It then gives our clinicians the opportunity to treat ongoing. We have also developed SEO and SEM capability to make sure we get more than our fair share of new customers. Of course, efficiency and profitability run through everything that we do. In order to really invest for growth and really make sure that we are financially efficient, we have an excellent centralized procurement, shared services. We develop our own white-label products, really enabling us to then invest back into better pay, technology, facilities. It is a virtuous circle to be the market leader. Keep doing that.
We are laser-focused on people and talent. Clearly, talent is everything in our organization. We invest in graduate academies. We invest in leadership programs. We have invested in a centralized recruitment and retention system, all designed to make sure we have the right vets and the right nurses in the right place at the right time. Just finishing off on this slide, turning to technology and data infrastructure, the reality is the veterinary sector is still maturing. A lot of the vet world still operates on outdated, fragmented systems and manual workarounds. We have deliberately invested a substantial amount of our capital over the last three years into a modern, integrated platform, from single practice management systems across each country and region to back-office standard operating protocols, financial systems that give us the tools and the data that we need to manage the business.
Everything is basically designed to ensure the vet team spends all of their time on serving our customers, and we take care of everything else. Lastly, in terms of sustainability, our positive pawprint strategy is more than just a report. It is embedded into the way we work, from the sustainability work we do on renewables, from well-being initiatives to our staff, to the reduction in antibiotics. We have basically designed a platform to ensure that we are leading the sector and moving from a reactive, traditional environment to a lifetime-value, proactive care relationship. Finally, let me just bring this all together. There are three things that you can boil the success of IVC Evidensia down to. Our people start, without question. We do not sell a lot of product. We sell time. We sell specialist time. Our people are truly at the heart of all we do.
We support our people and our clinical independence of our vets in everything that we do, in the training, in the equipment, in the recruitment. It is absolutely key. Secondly, we have taken a market-leading position in a robust and growing market by building that platform that I have just described and really making sure that the offer we give to our customers is the best in class. Thirdly, and really importantly, we have a very strong financial profile, a profile that can profitably grow year after year and, of course, supported by accretive M&A. Overall, IVC Evidensia is a well-invested, scalable platform that is really fit to lead what is an industry that is modernizing and growing each and every year. Thanks for listening.
Next, welcome John to the stage, and then we do a joint Q&A with the three of you.
Oh, you need to.
Okay, then we do Q&A now. We're agile. We're agile. Yes. Do we have somebody with a microphone, please? Over here, please. Thank you.
Hello. Thank you for the presentation. I just wanted to ask, I saw some news reports recently about a potential IPO of IVC Evidensia. I was just wondering. It was in the FD, I believe, and it was based on source information. Just wondering if you had any thoughts on that.
Firstly, don't believe everything you read in the news.
Absolutely not.
The truth of it is we are in no rush at all. There's so many opportunities to continue to grow the business. We've got a pesky regulator that we want to get out of the way, which will be done by the end of this year. We will take a proper look at the future. Like I said, there's so much potential to grow organically and through M&A. We will pick the right time and the right location to do that.
Thank you.
One for Angeliki, please.
Thank you very much. It's Angeliki Bairaktari from JP Morgan.
Hi.
We heard earlier today about M&A being part of the toolbox. Clearly, you've done a lot of M&A in your business. You spoke just now about the regulatory investigation. How do you balance out sort of antitrust concerns with the growth in the business through inorganic expansion?
Okay. The first thing I'd say is there is plenty of scope for further M&A, plenty. Even in countries where we have a market-leading position, like Germany, for example, we still have less than 12% share. Where we reach a certain share level, then, of course, we focus much more on organic growth. The U.K. is a perfect example. I do not think I would look at it as trying to balance regulatory risk with M&A. I would look at it country by country. Across 19 countries, there is plenty of scope for further accretive M&A.
Hi. Amazing transformation you guys have done. You talked about how you've acquired 800 clinics. The tech investment on the platform as well was obviously very significant. Just curious, is that all funded by company cash flow, or has that also required some additional support by your shareholders? Thank you.
M&A is part funded by support from shareholders. Everything else I spoke about is funded organically.
Could you care to quantify or give us an idea of how proportional split of that capital?
No, I wouldn't. Okay. Thank you very much for listening, guys. Take care. Thank you.
Thank you, Simon. My name is Jan Makela. I'm the Group CEO of WS Audiology. I've been in this role since July of last year. It is my pleasure to take you through our story here today. I'm going to talk to you first about people with hearing loss. We're in the space of treating hearing loss. The space we're in is really medical-grade hearing aids. This industry, the business of selling hearing aids, is a very strong growth industry with strong tailwinds. We've seen mid-single-digit volume growth for decades. I think what's exciting is also that the drivers behind that, some of them sound a bit like the pet food industry or the pet industry. The drivers continue to be strong. We see lots of untapped potential to increase that growth rate for ourselves.
On this page, I'm just going to talk you through some of that. Our market is people with disabling hearing loss. There's about half a billion people worldwide today with what's classified as disabling hearing loss, which means in our language, moderate, severe, or profound. At the very far end of that, you have patients who have a cochlear implant. For the majority of this group, they are being fitted with a medical-grade hearing aid after a medical examination in an audiologist's clinic. Of those 500 million, about a quarter, 20%, today actually have a hearing aid. This group is part of a larger group of people with mild hearing loss. Mild hearing loss, there's more than a billion people. On top of that, 500 million. Mild hearing loss is when it can be diagnosed you have a hearing problem.
Your hearing problem is maybe in certain situations, in noisy environments, when there's unclear speech. The penetration of hearing aids in mild hearing loss is much, much lower, perhaps less than 5%. Many people start in a mild situation. They maybe take a few years. They experiment a bit. Then they come to moderate hearing loss. That's when they come into our catchment area. I may talk about that later, depending on the questions. There are 100 million people wearing hearing aids. This industry is about a $10 billion industry. There are about 20 million hearing aids sold every year. There are about 100 million hearing aids being used. The rate of growth of hearing aid sales has been mid-single digits for a very long term, much more than GDP growth. What's driving the growth of hearing aids? The first thing, of course, is aging populations.
Of course, there's also the emerging middle classes in the developing countries. There's also growth in reimbursement programs by governments. There's also increased awareness of the impact of untreated hearing loss. Untreated hearing loss has been proven in many independent prospective endpoint studies. Untreated hearing loss can result in greater depression, social withdrawal, and all of those factors. We see more and more people taking the choice to treat their hearing and not to be defined by their hearing impairment. All of these things give us more people need hearing aids, and more of those people choose to get a hearing aid. There's a long way to go with this. Many of our growth drivers can be around driving that penetration rate further. This industry, you could say, has been around for more than 100 years. I'll talk on the next page about it.
This industry went through a lot of consolidation in the last 20, 30, 40 years to the point today that there are five manufacturers who are really more than 95% of the value in this industry. To be a big player in this industry really is about working with regulators. These are regulated medical devices by the FDA and so on. There are many generations of technology. The leading-edge hearing aids today have been refined and focused in certain areas over the previous three or four generations. When you get a hearing exam, your hearing aid is programmed for your hearing loss. There are many edge effects to program as well. The complexity of programming the hearing aid and the software to program the hearing aid and learning how to program a hearing aid well is something which the incumbents have perfected, I would say.
Of course, we have 20 million hearing aids being used in the field. Hearing aids fail. Hearing aids break. They need adjustment. In many countries, the customers are allowed to return the hearing aid for no reason, with no fault, for three months or six months. There is a very big return logistics process and a return process, which also is something which the incumbents have really invested in heavily. To play in this industry, this attractive, high-growth rate industry with clear drivers of future growth, there is quite an investment requirement to be a competent player. Who are we? WSA, WS Audiology, was created in 2019 from two companies, Widex. Widex was a family-owned company in Denmark. And Sivantos. Sivantos was previously the Siemens Healthineers Healthcare hearing aid business. Sivantos was bought by EQT. EQT also invested in many other businesses in this space.
We have an online business called hear.com. We have a US managed care business that works in the Medicare Advantage space called True Hearing. EQT really bought those businesses when they were very small, nascent in this time period. I would say invested in those greatly. Those are now leading in their spaces. That continues to be a growth driver for us, as you'll see. When these two companies were put together to create WSA, the other thing that the company inherited was a great track record of new product launches. Between these two companies, we launched the first ever digital hearing aid in the market, the first ever rechargeable hearing aid in the market. We launched the first lifestyle form factor hearing aids, like earbuds and things like that, the first ever in-ear rechargeable hearing aid.
You may say, why is that important? One of the issues with hearing aids is stigma. Patients, users, have the perception that a hearing aid is a big thing, a noisy thing, a hard-to-use thing. That is one of the reasons people do not get a hearing aid. Driving innovation and making hearing aids easier to use, smaller to see, longer lasting is a growth driver. It has been a growth driver for us during this history. Many of those firsts were in the companies that we now have. The right side of the page talks about since the merger. I would start on the top right. You can see that in terms of volume, WS Audiology is the number one volume provider in the world for hearing aids. We ship about 5 million hearing aids per year. You see the others there.
Since the merger, our revenue has grown more than 50%. R&D has scaled with that. Now, industry-leading profit growth, EBITDA CAGR has been 17%. What have we done for the last few years? Clearly, we've focused on driving top line. Our top line growth here is about 10% CAGR in an industry of 5%. We've been bringing new solutions, gaining share, growing top line very strongly. The margin side has benefited from the top line growth. Also, we've done, I would say, a big chunk of the first round of post-merger integration activities: closing facilities, opening new manufacturing hubs in Poland and Mexico, standardizing our finance back office, and quite recently, really working on the R&D infrastructure. These products, these hearing aid products, are very R&D intensive. You may think it's a small thing behind your ear.
These hearing aids are not just an amplifier of passive sound. There is a lot of signal processing and a lot of software to give the impact of a top-grade hearing aid today. That R&D structure, we have worked on a lot in the last 18 months to have one R&D team designing two differentiated products. The growth has been really a focus, gaining share. The margin growth has come from the revenue growth, as well as some of the, I would say, cost integrations. As we look forward, what are the value drivers? What is the value creation from here going forward? This is actually an internal slide. The passion we have in the company is to help people with their first hearing aid and to help them with their hearing aid journey.
Many of my team talk about when a patient comes in who's been struggling with their hearing for the previous four, five, six years, they have a hearing exam. They may be a bit skeptical. When they get the right hearing aid and they get it fitted on them, the joy it brings to them, the joy it brings to their husband or wife as well, is something that many of our audiologists really focus on and brings them to work every day. We talk a lot about equipping more people. We talk about no one should be defined by their hearing loss. Going forward, and I'll spend a bit of time on this slide, one WSA. We are a company that was two companies. We have the Widex hearing aids. We have the Signia hearing aids. We are unique in having two hearing aids, two technologies.
None of our competitors has two technologies. This, for me, is a sustainable competitive advantage because these hearing aids are designed and built with the silicon and the software and the brand positioning to solve two different problems. The biggest group of end users of hearing aids struggle with group conversations in noisy environments. You find yourself maybe in your 50s, your 60s, your 70s in a restaurant, in a bar with your family, in a noisy environment. The TV's playing. You can't really make out what people are saying, especially if there's a couple of people. You are kind of strained. You are sort of straining to understand what's going on. Eventually, you get a hearing aid. That group conversation in noisy environments is the biggest group of people who buy hearing aids for the first time.
Our Signia product, we're in our third generation of focusing on specifically that group, that problem. The Widex product from the Widex company for many decades has been a different technology. It's called time-based processing. The Widex technology gives a very pure, natural sound. You will not hear a very synthetic sound. You will not hear a very processed sound. You will hear speech clarity and a lack of artifacts. For maybe a third or more of patients, that is their overriding issue. They need treatment for their hearing loss, but they don't want to have a very heavy processed sound that sounds like software is making decisions for them. Widex is the solution for those patients. Those are the two biggest groups of patients getting hearing aids today. We are the only company who are designing for those two patient needs.
Our competitors are trying to average across both with one technology. In this industry, having a convincing story and heritage and roadmap that talks about focusing on the patient and focusing on their hearing loss is something that resonates well with the audiologists. This is something that we have not done yet to its full potential. This is a big growth driver for us now as we align these product roadmaps and align our sales force to much more cross-selling to gain share. This is a big growth driver for us. In the middle is profitable growth. There is a range of topics in here. There is work we need to do on our cost of goods sold. As I said, we are two companies in a fairly long product life cycle. Developing hearing aids and chipsets is a long-cycle development process.
Until we worked on the R&D team, we had two separate sets of design, two separate sets of components. Most of the hearing aid components are the same. They do not drive differentiation. In the next few years, you will see the cost of goods sold and the speed to market, the speed of innovation improving as a result of those R&D organizational changes that we have made. In profitable growth, of course, those NPIs, those new product launches, will come out at higher gross margins and lower repair and return rates. The last category is beyond the product. If I tell you that the average person who starts to get disabling hearing loss, they wait four to eight years before they go for a hearing exam. They have a hearing exam. They are diagnosed with hearing loss. Half of them then do nothing. They go home again.
They go back into the four- to eight-year waiting period. The other half get a hearing aid. Half of them never use the hearing aid. They return the hearing aid or they put it in a drawer. The remaining half use the hearing aid. Why is there this massive drop-off? Even in countries that give away hearing aids for free, more than half the people do not get them or use them. Why is there this massive drop-off? What can we do about this drop-off? This is beyond the product. Enabling the access, addressing the stigma, and personalizing more the hearing aid experience will drive penetration rates up. This is a big growth driver for us.
We are ahead of our competition with some of the investments we have, like the hear.com business, in terms of getting more people on the journey who would not have started otherwise. As we go forward, beyond the product for a seamless experience for the audiologist and a seamless experience for the patient to get the right hearing aid, to get it personalized to their needs is going to be a big growth driver to address that dropout in this market. I'm very excited, actually, about this part. Overall, what's our value creation story going forward? Yes, we have a great position in emerging markets. Yes, we have the biggest volume. We have a great growth platform to build on with our online business, which will feed into beyond the product. We have the world's first cloud-based fitting software for audiologists.
We have a strong product pipeline with our combined R&D team at higher gross margins. We have a sales force now with a much more compelling complete story addressing the two biggest patient populations. To recap my last page, we're in a clearly under-penetrated market with clearly growth in terms of populations and penetration and awareness. We are the volume leader already. We are the player who's brought many of the leading innovations to the industry. We will continue to do that because we know it drives adoption. We know it drives conversion. No one else has two differentiated brands. My sales team can talk to our audiologists about how can you solve two problems with one tool. Only WS Audiology can solve these two different patient sets. We have the fast-growing online market as well.
I would say a strong, consistent revenue growth since merger with industry-leading margin accretion and a strong path to continue that into the medium term. That's it. Thank you.
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Welcome. Thanks for giving me the opportunity, EQT, for telling the story of IFS and sharing the message about what we're doing as an organization.
I never tire of seeing a video like the one you've just seen because it brings to life the impact that we're making on a day-to-day basis on some of the industries that we serve, hardcore industries that make goods, that service, that power, and protect our planet. I would hazard a guess that every single person in this room today has been indirectly supported by IFS software. If you traveled today to get here on an aircraft or a transport system, or indeed, if you took the elevator up the stairs up to this level, level 35, you have been supported by our customers who are running IFS software to maintain the equipment that they provide in the case of those industries. I know this to be true because I went to the lift earlier. I looked for the manufacturer. I couldn't find it.
I took a picture of the lift. I sent it to ChatGPT. Which lift is this? The lift was confirmed as being one of our customers. It is absolutely true. You have been supported today by IFS. A huge thanks to EQT for giving me the opportunity to address you today again, just to tell a little bit of the IFS story and to EQT for being an incredible partner for us over the last nine years. Yes, as an investor, an incredible value creation that we have been able to deliver, but also to allow us to deliver incredible value to our customers and the industries that we serve. We are an extremely high-touch, customer-obsessed organization.
We have a very primary, fundamental, simple belief that if we are dialed in to what our customers need of us and we respond to the opportunities that they have and the challenges that they face in their business through our software development, then they buy more. It's pretty simple. For the last five years since the introduction of IFS Cloud, which is our core product, we've been developing a class-leading industrial AI platform that allows our customers to dynamically manage their assets in their mission-critical operations, their people, their services, all in a very responsible way. When our customers implement our solutions, it results in increased productivity in their operations, extends the life of their assets, and allows them to manage their workforce in a much more optimal optimized way, which has the benefit of reducing travel, reducing energy consumption, all of which contributes to lower carbon intensity.
The vision that we've set as a company, as a team, is to be the next $100 billion EV industrial software champion. That's the course that we're on. Perhaps my favorite slide of the day, which shows consistent, strong, accelerating financial performance over a 10-year period. EQT first invested in us in 2016, taking the business private. Since that point, we've been on accelerated growth. If you looked at the CAGR, recurring software revenue growth from 2016 to 2025, it's in the region of 30% CAGR. Margin has expanded over that period. In the last financial year, we delivered a 30% EBITDA margin. We're still very much on a margin expansion journey as we get operating scale and we get operating leverage.
On the 31st of December last year, I'm sure it was midnight in San Francisco, but the team delivered the EUR 1 billion ARR metric, which is a massive milestone for us as a company. That was 32% year-on-year growth on ARR. Strong, consistent, stable, accelerating financial performance. We've also encountered a couple of evolutions in our product stack. In 2021, we launched IFS Cloud. That's a fully SaaS, modern end-to-end platform, which we launched to our customers. In 2024, we launched IFS.ai. All the underpinning capabilities from a data, from a services perspective that allow us to capitalize on this massive once-in-a-generation opportunity to deliver AI capabilities to our customers.
We've also had the benefit of a number of inorganic additions to IFS over that period, the most recent of which was Copperleaf, a business that we acquired last year that was a public-to-private transaction, Canadian public company. We paid CAD 1 billion. Already, that's generating huge value with 27% growth this year alone compared to a modest low single-digit growth as a public company. It extends the reach of our asset management capability into asset investment planning. We're servicing capital-intensive, asset-heavy businesses. The ability for us to take Copperleaf and sell it into our install base of IFS is super strong, equally the same from an IFS standpoint into Copperleaf.
We're only acquiring businesses that make sense financially, where we think we can create value clearly, but that are sensible add-ons to the asset and service orientation of IFS in the six core industries that we serve. We're a global business with over 7,000 employees. Together with our partner ecosystem, which we've invested in heavily since EQT ownership, we have over 400 partners now in our ecosystem. Altogether, that's about 13,000 people globally servicing our customers and creating new demand generation for IFS solutions and services. I know we've got a couple of partners in the room today. I know that Deloitte and PwC are here. Thank you for your continued support. We couldn't do this without the acceleration that we get from the partner community. I've also spoken to a number of you who've got portfolio companies that are very attractive from an IFS standpoint.
I did give you my details, but make sure you send them my way. We've got some great offerings for you. $1.2 billion revenue we delivered last year, 5,500 customers. We're delivering 82% customer satisfaction. It's actually 85% tracking this year. We're ruthlessly focused on making sure that we're delivering value to our customers and they're happy with what we're delivering. With 115% net retention, perhaps more tellingly, 120% is the net expansion rate. And the GRR, the gross retention, is 95%. These are super strong metrics that demonstrate the value that our customers are getting from IFS solutions every day. We're a scaled business already. This is the level of contribution that we're making to our customers. Two billion people every single day using walkways and elevators maintained by IFS software. One of those customers is those folks who provide the lifts in this building.
When our customers take our scheduling and optimization solutions, that's field service. Think of utility companies or telecoms companies with large field forces, the technicians fixing faults and repairs, installing fiber. We're managing those workflows on a day-to-day basis. What we find is, statistically, because we've got capable value engineering tools, that customers are delivering, on average, a 49% reduction in contractor spend when they implement our solutions. You can see the level of ROI our customers are getting. 800 million passengers every year flying commercial airlines that are maintained by IFS software. This is really complex, mission-critical stuff. We've got the tail configuration of every aircraft that's a customer. We know every single component on an aircraft. We know the maintenance schedule, the requirements from the OEM, the requirements from the regulators. We're able to manage all the workflows of that aircraft maintenance.
Every blade in an engine, when it's reconstructed, is tracked by IFS to the highest safety standards. This is an example, an illustrative example of some of the logos we're super proud to serve. These are some of the most complex, asset-intensive, regulated businesses on the planet. You can see that I've arranged them around the six core industry verticals that we serve. All of these industry verticals have a commonality. They're capital-intensive. They're asset-heavy. They're data-rich in nature, which gives us a fantastic opportunity to deliver AI-based services. TotalEnergies is an example of a new logo that we acquired in January this year, one of the biggest oil companies on the planet. That was a direct displacement of SAP in the asset management part of their need.
IFS will be the provider of all asset and planning and maintenance for TotalEnergies across their global footprint in exploration and production, in chemicals manufacturing, in refining, in power generation, in the renewables portfolio. That is the level of support we are providing. Comcast was a Q4 deal last year, one of the biggest media and telco companies in North America. We are supporting them and the next generation of managing their 25,000 engineers on a day-to-day basis who are fixing faults, putting fiber into the ground, and delivering higher degrees of customer satisfaction. Our IFS Cloud platform, this is a representation of our IFS Cloud application, highly composable, modular by design, which is extremely distinctive in the competitive landscape. We have broken down the traditional silos of ERP, of asset management, on field service management.
We give our customers a composable architecture where they can put together the range of capabilities that they need for their given situation, right across world-class people management, asset management, service management, and enterprise service management. Single UX, single data model, single application. What we tend to find is our customers, 58% of our customers last year, they did not just take ERP, they did not just take asset management or service management. They took a combination of all three capabilities. This really works. This is what is driving often our expansion. When we renew a customer, we typically see a customer renew in an IFS Cloud, they take an increased footprint. The average renewal uplift was 37% over the last three to four years. Agentic AI sustainability is built into the core of the solution. This is all designed to service these six core industry verticals.
Unlike some of our competitors that are offering enterprise application software for 30 industries, we're focused on these six. We think that market's big enough for us. We're super proud. It's a real point of pride for the team that we're recognized as being leaders in each of the domains in which we operate by industry analysts. Gartner, you can see, recognized us seven years in a row as being the leader of leaders for field service management. Today, we announced that Gartner recently analyzed the EAM market, the enterprise application management market, and they declared us for the fourth year in a row as the number one vendor in size, but also in growth rate. We are not anywhere near done. This is a continuing accelerating theme. IDC, you can see, also recognized us as a leader in EAM.
In every single domain that we operate, we make sure we understand who are the analysts covering the segment, and we make sure we understand what it's going to take to become number one. If we're not number one, we're certainly number one, two, or three in every single segment. If you put all that together, what are the kind of underpinning attributes that drive this success? Cloud, IFS Cloud, I've talked about. That's over 100 composable modules that are in the solution that our customers can put together in any combination that meets their need. For example, Tetra Pak, they take our asset management capability. We're helping manage the assets that they produce. They have an after-sales service part of their business. We're also enabling their engineers so they can put together that combination. From an AI perspective, this is not brochureware. It's not prototype.
It's not MVP. We're already delivering 14% of our ARR as native AI capabilities available today in our solution, which has given us a phenomenal head start for this new era that we're entering into, this massive general-purpose technology shift that's going to fundamentally change every one of our businesses. We're incredibly well placed, particularly with the depth of understanding that we've got about our industries. As I said, six industries are enough for us because that gives us $160 billion worth of TAM that we're able to address. You can do the mathematics. With $1.2 billion of revenue, there's a huge amount of headroom for us to work into. Our head-to-head competitive win rate against our major competitors is no less than 55%, ruthless on deal qualification. Sustainability, I've mentioned, it's embedded into the core of our product.
Based on some research that we did with Generation recently, we concluded that, and I know this is a lofty goal, maybe a bit unrealistic, but if we had 100% penetration in our top three markets for the industries we serve, we'd be able to allow our customers to be able to offset 2.6% of global CO2 emissions. That's the potential of IFS software. To put that into perspective, that's the entirety of the aviation industry for one year. It is super important to us, and it's built into the very fundamentals of our solution. All of that has helped us achieve comparatively strong performance to the cohort that we compare ourselves to on a regular basis. These are other folks in the industrial software category. We are beyond a Rule of 50 business.
We were a Rule of 53 business last year, and we'll be Rule of 53 again in 2025. Perhaps putting it all together, we're building the next $100 billion EV industrial AI champion with $163 billion of TAM, 5,500 customers that are in sticky industries, but we don't rely upon them being sticky. We're focused on giving them as much value as we can and responding to their needs. That's what's driving net retention, expansion, and GRR. Sustainability built in. We've got 200 native AI capabilities built into the solution today. Of course, the product is recognized by our customers and industry analysts alike as being leading. You've seen the financial profile. Thanks for having me. Thanks for listening. Thanks to EQT for being that incredible partner to us.
I know we've got a bit of time for Q&A, and I'll be available later over drinks as well.
Hi, Mark. Actually, maybe this is a question also for Bert, but I guess my question is, how has or how will the governance structures and processes change as a result of Hg, as a result of Hg becoming a co-control shareholder?
Definite question for Bert.
It's a co-control structure. Together with Hg, we continue to control the company. It's very simple. Hg was already a shareholder, so we've had a fantastic partnership with them for a number of years now. Maybe Mark can also comment on that, how it works in practice, but that is how it is from a legal perspective set up.
Yeah, it's interesting because I get asked all the time, "Oh, you've got three shareholders. How does that work? That must be difficult." I'm like, "Actually, it's incredibly easy." It's a really strong partnership. I mean, clearly, EQT and Hg have worked together, I guess, in many portfolio companies. I think it works incredibly well. What we tend to do on a practical basis, which will continue, I imagine, is the TROIKA system that obviously works from an EQT standpoint. Every other TROIKA, the other shareholders are invited to. It just continually creates an open dialogue, but obviously gives us the ability to talk with EQT on a private basis as well. I don't see it fundamentally changing.
Thank you.
Okay, excellent.
Great. Mark, he will be available for the.
Yeah, I'll be here during drinks. I'd love to chat to any of you who've got any further questions. Thanks for listening.
Excellent.
Hi everyone. My name is Masoud Homayoun. I lead our Infrastructure business here at EQT. I know there's been a lot of slides and a lot of presentations, but thanks for staying on for this golden nugget. Hopefully, it's worthwhile. Look, it's a business we've built over the last 16-17 years to now become one of the global leaders within Infrastructure investing, really with top performance and perhaps most excitingly, some very positive market tailwinds, which both you'll hear from me and Aziz later. Just starting off with what is driving this Infrastructure opportunity?
First off, I'd say there's a ton of essential services that we need, you all need in your daily lives. That's power, connectivity, water, waste, transportation, logistics, et cetera, just to make society work. Now, that needs to be continuously refurbished, improved, and invested in.
On top of that, we're right now experiencing two of the largest megatrends out there. You've heard them many times throughout the presentation today. It's the energy transition, and it's the digitalization of society and AI. Both of those are built upon infrastructure. There is no AI without a data center. There is no AI without connectivity. There is no AI without supplying that with much more power. Therefore, we find ourselves in an opportunity where there's trillions worth of dollars of investment the coming years that is needed. Now, at the same time, the folks who used to do these investments, governments and the largest and large corporates, are capital constrained. They're capital constrained because of balance sheets of governments. They're capital constrained because they need to spend money on defense or demographic challenges.
That creates, in our view, a fantastic opportunity for private Infrastructure investment and the likes of us who can come in with industrial experience and capital to really harness that potential going forward. That is why you have seen the asset class grow significantly over the last years. I think, candidly, the prospects ahead are even more exciting. We are investing in businesses, in companies that own these assets. These are companies. They are not boring assets. It is not a road or a bridge. These are companies that have development potential, that have growth potential, operational improvement potential. We are doing that across the lifecycle of infrastructure companies. You see it here from right to left, basically starting with businesses that are in scale-up phase, mid-size infrastructure companies that need growth capital and support to grow, industrial support to grow.
To the middle, where we have more mature businesses, where there's still growth potential, but also operational improvement potential in order to have them optimized. All the way to the right, where you see even more stable yielding businesses that we can own and improve continuously for the long term. Now, the middle strategy here is the one where we started some 16, 17 years ago. We've scaled that now. The last fund was a EUR 16 billion fund. The current fund we just closed, Fund VI , at EUR 21.5 billion. It has scaled. The other two are more recent in terms of having started them, but I certainly see significant potential in those as well on a go-forward basis. Just to exemplify what kind of companies we are investing in, you've heard, again, AI. You've heard digital decarbonization many times here today.
On the left hand, you see one of our digital investments, EdgeConneX. It is one of the global leaders in being a third-party provider of data centers. They develop, own, and operate data centers on behalf of hyperscalers. These are your Microsoft, Google, Amazons of the world. This business has obviously been poised for growth over the last few years. We acquired the business and partnered with them five years ago. Since then, they have entered 13 new geographies. They are now in 21 countries. During this time period, they have sixfolded their contracted capacity. Just to convert that to earnings, the profit of this business or the EBITDA of this business has gone from $120 million run rate when we bought it 2020 to being $950 million EBITDA per Q1 this year. A massive growth.
I think we're still in the beginning of what we are to see. If you look on the right-hand side, renewables and decarbonization. We currently have eight portfolio companies. If you listened to Dorothy before, she mentioned one of them, where we're developing renewable power, storage of renewable power. Current portfolio is around 9 GW of power. Convert that to plain speak, provides power to corresponding eight million households. I think more exciting is we have a pipeline of another 100 gigawatts, which we're developing in these companies and partnered to develop. That requires $100 billion worth of capital. There's a lot of $100 billion I've heard today, but that's another $100 billion that is needed. I think ultimately, the most exciting thing for us here is if you look at these two, these trends are converging. We're going to need a lot more data power.
If you do a ChatGPT prompt, that consumes 10x-20x more power, which means that we're going to need a lot more power and renewable power. There is a virtuous circle in this, which we find very exciting. Now, in terms of how we approach these infrastructure companies, I won't repeat what my colleagues have already said here today, but within Infrastructure, we have one of the largest teams globally with sector expertise. Energy expertise, environmental expertise, digital expertise, transport expertise. We couple that with the industrial advisors that you've heard. These are people who have seen it, done it. They're part of the identification of those themes. They're part of the diligence of the businesses, and they're part of the value creation. Really differentiated in terms of how we can bring value to these companies.
With the governance model that we have and being controlled investors of infrastructure companies, we can then direct that effort and focus that effort. Simply put, we focus on three things: growth and growth capital in these infrastructure businesses, where there is secular growth. Number two is operational improvement potential. Number three is de-risking these businesses. The outcomes so far have been strong and, I think in our world, even more important, consistent. We have delivered 15% net IRR on the infrastructure funds, which is almost private equity. I know it is not quite, but almost private equity returns and realized returns on invested capital of 2.5 times, which really puts it at the top when you do benchmarking. I think bear in mind that these are downside-protected, inflation-protected companies.
You don't wake up one day and just decide that you don't need water or that your waste is taken care of or connectivity or power. To combine that upside potential with the downside protection is truly attractive for our clients. That's a little bit of an intro to our infrastructure business. Next, we'll deep dive into one of the sectors and themes that we have been most active in the last few years, last 15 years really, which is the environmental sector and specifically Reworld, where we have the joy of having Azeez here. I'll just intro him with saying we followed this company. It used to be known as Reworld. It was listed in the U.S. We followed this company for a couple of years before we took it private. What we loved about this business was three things.
Number one, the long-term trends and the prospects. You may or may not be aware, but in the U.S., they still put two-thirds of all the waste generated in the country into a hole in the ground, literally into a hole into the ground in landfilling, all the waste that is generated. We think that you should see that as a resource and utilize that as opposed to just see it as waste that you dig down. Certainly, it's not sustainable for the long term. Secondly, this company was clearly misunderstood when it was listed. It was seen as an energy business because that was the output, whereas truly it had a unique footprint of waste management facilities. Thirdly, candidly, it's quite mismanaged. Creative value-add opportunities were not getting capital because the company was capital constrained.
There wasn't a program for continuous improvements in place, which is typical of what you should have in an environmental business. There wasn't a go-to-market strategy, et cetera. There was a lot of potential in this. We knew that we needed to have also a new CEO at the helm if we acquired the business. We managed to, and we were very fortunate to identify Azeez as we were looking at this company. He joined us actually as an industrial advisor throughout the process as part of the diligence. He'll be very humble, but he comes with tremendous experience having led several GE businesses extremely successfully, led international development of energy businesses. On top of his day job, he was supporting us with the diligence of this business. Ultimately, when we acquired it, he could step in day one and lead the transformation.
Please help me welcome Azeez, who's flown over the pond for this. Aziz.
Thank you, sir.
Thanks for the opportunity to be here. Just to level set, that was a great introduction by Masoud. What we do and the impact we have is actually in our name. Before that, when you think of Reworld, this is a perfect example of a company where sustainability is cool. This company does that stuff, but it also can be a great business. What do we do? The R in Reworld is about we repurpose, renew, recycle, recover stuff from waste. The world is the impact that we have on the world. Our claim to fame is that we avoid 20 million tons of waste, which is about 10% of the entire U.S. waste, from going into the landfill. When you avoid waste going into the landfill, you avoid landfill methane, which is 80x harmful to the greenhouse effect.
That actually makes us a carbon-negative company. When you put it together, that's the portmanteau of the things we do and the impact we have. Just on the recover-recycle stuff, every year from the waste, actually from the municipal waste that you throw out, we recover metals enough to build five Golden Gate bridges. To also give you the impact on the carbon footprint of stuff, if you took the entire northeast of the U.S. and planted it with forests, imagine how much carbon it absorbs from the atmosphere. That's the impact that this one company has. Now, besides that, on the business side, it's also good business, $2.6 billion, $760 million of EBITDA. We have 4,500 employees, 4,500 customers. We have marquee customers there. Look at Bayer, Pfizer, 3M, GE, and so on and so forth.
Let me call your attention to Waste Management, Republic, Veolia are our customers too. Because when their customers demand them to avoid landfill, guess who they come to? They come to us. With that said, let's take a look at our footprint here. If you look at the map of it, we are in the early innings of dotting the map of the US with more facilities. When I took over, we had 60 facilities. We have 100 now. If you look at the East Coast, we love two kinds of locations. We love locations where there are huge population centers, but there is no space for landfill, which makes it the Eastern Seaboard. We also love industrial centers. Where do you find industrial centers in the U.S.? Right smack in the middle, which is the Midwest area. We do not like the Rockies that much.
There are no people. There are no companies there. While we love the waste from the West region, we do not like operating there. We shuttle the waste from California, Oregon, to Texas. This is kind of how we are strategically located. We handle two kinds of waste. MSW, municipal solid waste, is everything that you throw out of your household, and everything else which is generated by industry, which is profiled waste. You will keep hearing me talk about these two kinds of concepts of waste. We also have two kinds of facilities. We have close to 40 facilities, which are these gigantic power plant-looking structures that manage municipal solid waste predominantly. We also have these big Amazon warehouse-looking facilities called material processing facilities that manage profiled waste. We strategically put them in different locations, and this concept is extremely important to our customers.
If you look at our transformational story, the biggest repositioning that we are embarking on is to move us from being a leading waste-to-energy company to a leader in sustainable waste solutions. The before-market size was close to $10 billion, and we were the leader in that market space. That market was not growing that much. Just by this repositioning, we are now playing in a $45 billion market space, which is growing quite enormously because of volumes and price. Oh, by the way, we are also a leader in that space. That is the space that avoids waste from going into the landfill. The next biggest leader, which may surprise you in this one, is Waste Management, and they are behind us by a mile. Now, there are a few things here. The multiples of the space before, which is the waste-to-energy space, is sub 10.
When you go into the waste space, the multiples are in the 16-20 range. This kind of a transformation is extremely important for us. Why do customers come to us? The customers come to us for a few reasons: our locations, our national footprint. Like I said, many of our customers are national customers. They are Fortune 1000 customers. They have a national footprint, and they need their partners to be close to them. As a result, we being spread out the country is critical for them. The second is we provide—we do not turn any kinds of waste away. We do liquid waste. We do solid waste. We do hazardous waste. We do non-hazardous waste. We cover 45 end markets. We kind of serve a broad set of waste in a broad set of markets.
is also advantageous to us because we are not stuck to any volatility of any particular end market. There is a kind of a portfolio effect that is going on here. Lastly, we are constantly innovating. We are bringing in technologies, and we are a key talking point in many of their annual reports on how we help them achieve their sustainability goals. These are the reasons our customers continue to come to us. Now, let's talk about the transformation itself. Before I delve into this, I just want to give a shout-out to my partners there. You have heard the term TROIKA. Howard Lance, our Chairman, and our lead partner, Alex Darden, have been fantastic partners. Non-judgmental, safe environment every week to discuss issues of the business. Also a shout-out to the other EQT team members, Vic Dhawan, Mev Ikis, Juan Munoz, and Jimmy Chen.
They've been fantastic partners to me and to my management team in this journey. Now, at the end of the day, if you look at the transformation itself, there was a best practice that I have taken from EQT, which was new to me. In the early stages of the company, we launched this Full Potential Plan. Usually, I take a year to figure out strategy and other stuff. And for one year, I'm learning the business. That kind of luxury was not given to me. I kind of am thankful for it after the fact. We launched this Full Potential Plan. This is an unconstrained value creation plan. And we are fourth year in a row executing this particular plan. Usually, when you launch an initiative or a plan, it keeps changing. But we created a five-year plan.
Since then, we've extended it to another five years, and there is no natural ceiling to it. There are three things that came out of this plan. The first one is called Enhance the Core. Enhance the Core is all about the way we operate, the way we organize ourselves, things like lean business operating system, KPIs, low-cost country procurement, pricing structure, and so on and so forth. A third of the value creation comes from enhancing the core, bringing in a new management team, lean business operating systems, and so on. The second one is where the other third of the value creation comes from growing profiled waste. Why is this growing profiled waste such a key thing? The pricing of profiled waste is six times that of municipal solid waste. Just the leverage is huge for us. EQT has enthusiastically supported me in this area.
We've invested close to $1 billion. A portion of it is to upgrade the facilities, but a big portion of it is to acquire propiled waste capabilities. We performed more than eight acquisitions. We've added another 1.5 million tons of propiled waste. Just to give you an idea, I said the leverage is 6x. So 1.5 million tons of propiled waste is the equivalent of, I have to do the math on the fly, it is, what do you say, nine million tons of municipal waste. It is quite significant. We've already grown the business by 1.5 million tons, and we need to do that again over the next seven years. Just to give you a perspective on what 1.5 million tons is, recently, Waste Management bought Stereocycle for quite a sum of money. The amount of tons they process is 500,000 tons.
It is quite a stunning number. We've done it. We just need to do it once more. Finally, byproduct value maximization is about how you can extract more stuff from waste. Do you know we actually take our waste, we convert it into a waste-derived fuel, and we use it to displace coal in cement usage? We are the leading provider of that. We are in the early innings in the U.S. compared to Europe. These three areas of growth are going to continue on. When you look at some of the statistics there, the facilities have grown by 40. We expect to add seven more facilities every single year with the capital that we generate. We are not going to divide it out. We are just going to put it back into the business. This has been quite exciting.
This way, I would say we go from being a player, like kind of a big fish in a small pond, to a big fish in a big pond. That is the goal here. Finally, I just want to wrap up by saying what I described so far is just like the base growth, something that we can deliver without doing any gymnastics. We do not need any mega trends or macro trends to come into play. There are a few cool things that are happening in the US industry. The U.S. is always about 10-15 years behind on that sustainability journey compared to Europe. When it gets to that particular point, you will not need 40 TTFs. You will need 400 TTFs. Each TTF takes $1 billion to build. You can think about kind of the growth that is out there.
We are the leader, not just in the U.S., but in the world of having those capabilities to build it. There is also eRINS. eRINS is kind of a carbon credit. Many people, we actually are 10x-20x cleaner than solar. Our carbon credits are worth much, much more than anybody else. Actually, we are the only carbon-negative company. Even solar is slightly carbon-positive. That trend, when it comes up, now it is a Republican government. When the government changes at some point in the future, that bill will be back on the table. We are not counting on that, but that is pure upside. Pretty exciting business, a lot of growth upside. I also want to wrap up by giving my management team. I have been fortunate to attract my team.
They could have been in any company that they want to, but they came, they followed me here, and they have delivered these outstanding results. I thank you for your attention. If there are any questions, happy to take it.
Conni Johnson, everybody. My name is Kriti. Thank you guys so much for having me. I have just spent 30 minutes picking Conni's brain and deciding how to synthesize that in a short amount of time. I think you can see the panic on his face of what I am about to ask him. Conni, let's start big picture, and then we will dive into the details. How are you thinking about the world right now?
The world is exciting. It is not that different from other crises we have had or turbulent times. I am pretty much at ease with what we have and how we operate. The fact that we are global is also very helpful. We can put money to work where we think it makes sense and pick the sectors we like. I am actually pretty fun. I am getting easily bored if things do not change. It does not change now, so that is good.
We have that in common. You seem more optimistic than most at the moment. Most people panic at change, at volatility, at uncertainty. You do not have this problem?
I think we have a good machinery. We have a well-oiled machinery to manage the challenges. We are fine with how the market functions. We can sell things that we are ready with that is good quality, a good deal flow. We like the sectors we invest in. I also like the fact that we are global, like Jean has talked to us about here today. That means that we can put our resources and our attention to where we think it makes most sense, where we can make most return for investors. I might be a bit more concerned about the private equity market in general as an industry.
Tell us more. What keeps you up at night?
I think that the industry is trying to do so many things. I think we might not put enough emphasis or priorities on why we are here. We are here to deliver good returns to our investors and doing so in a responsible manner. We are running around doing a lot of other things now, meaning that maybe the focus on return isn't there, and that's bad for the industry.
Do you feel like, given I'm going to marry the two topics we just talked together, do you feel that the increase in the volatility, the emphasis on having liquid assets that you can very quickly move, has changed just how attractive private equity is as an industry, given how attractive it was, say, two, three years ago?
Yeah. If you have good tailwind, interest rates are low, multiples are high, then you can do good investments and create a return without working a lot with it. Today, you need to be able to make a difference in what you do. I think you can see it as something bad, but I think it's something good because that will also tell the winners from the not-so-successful firms. Most of our long-term investors, they are not short-term. They are not concerned about liquidity. They rather like us to manage their great assets for long. They are more concerned about sort of buying and selling and M&A here, M&A there, and a new fundraiser.
A lot of the capital that we're actually looking at being our long-term partner capital, they are not concerned about the problem that the exit market isn't that hot because they have a long-term view. They have a very diversified program. It is more sort of what you read about in newspapers and somebody that has just a new started program or doesn't have the resources to build up the competence to invest in this space because it requires a lot from our investors to become a good investor in private equity.
Let's take that piece by piece. You mentioned that most of your shareholders are long-term investors. What about the short-term ones that are worried about the deal glut that the industry is seeing?
Yeah, but that's not our problem. If we can find enough money. We have the difference between shareholders and investors. Shareholders, they can buy and sell their shares every day. The investors, they make long-term commitments. And the ones that really look for the return that we have been able to deliver in the past and will be able to deliver in the future, they have a long-term approach. They shouldn't invest in this space. They shouldn't invest in this space to trade in and out. They can do that on the stock market or with hedge funds or other things. I think what we are here to do is to deliver long-term return for our investors.
Conni, you mentioned, though, that the deal market isn't so hot. When do you think it'll be hot again?
I don't know.
Fair enough.
Anybody with a good crystal ball here?
Given the long-term strategy and the volatility and a lot of that emanating from geopolitics and the policy coming out of Washington, has that changed EQT's strategy at all?
It hasn't changed the strategy, but it has been rather favorable for us not being based in the U.S. and being a U.S. firm because the ones we're competing with is almost exclusively the U.S. firms right now. They are having some headwinds out in the world for reasons caused by others than themselves. The flip side of that is that people are looking more for managers that are not based in the U.S. and maybe to deploy money with GPs that is not U.S.-based or U.S. dollar denominated. It has benefited us, especially in Asia, but I would say also in Europe to some extent.
What do you say to global investors that are looking to invest in Europe or saying, "Give me a reason, Conni. Give me a reason that Europe will suddenly wake up and catch up to the rest of the world"? Is there a reason to be optimistic here?
Europe would never have been able to get organized without getting pressure from somewhere. Now we got pressure from the U.S., and now we are trying to get organized. It is clearly so that the understanding of the necessity of change is there. Now we are waiting to see the actions. We see some signs, but there are so many things that need to change to get Europe back to a position of competitiveness. It is talked about, and everybody travels around, meets, and discusses these kinds of things. It has to be proven that we also can get into action and create the right regimes, regulations, allowance to consolidation. We need to have one common capital market. We need to have a handful of strong, big, successful European banks. Basically, we have maybe one today in Europe. Those things need to be put in place.
They need to be put in place by the politicians, unfortunately. That is, of course, a bit scary, but we are hopeful that we'll get there. We're helping them. We are participating in the dialogue around that.
As you say, Europe is famous for acting when there is a crisis. But we've been talking about the Capital Markets Union for 10, 20 years, maybe. Is it on the horizon, do you think?
It's discussed. I think the bank consolidation will come first. There are so many things happening now on the continent between Italy and France and Germany. The politicians and unions, they're still resisting, but it's heavily discussed. I spend a lot of my time in Italy. You know what happens in the Italian banking market is a complete civil war. That leads to consolidation. That leads then, hopefully, to spreading that gospel to other markets as well. The equity capital market is easier because that could be decided in Brussels.
When we talk about, I'm going to put Italy to the side for a second and talk about Germany instead, because the antithesis to some of the trade concerns and the volatility emanating from D.C. is that, well, it's OK because Germany is about to unleash all of this fiscal spend over the next 10 years in defense, in Infrastructure. How does that help or hurt private equity?
It becomes a lot of investment opportunities there in those spaces. Germany is sort of the engine of Europe, even though we keep denying that it is economically. We all follow what Germany does. France is trying to balance it a bit. The rest of us, we are following. I think if it leads to economic development, which it should lead to, it should be beneficial for us as well. I think the issue is maybe more on the private sector, the startups, the companies that need to have expertise to grow, the early clusters. That is a requirement to get a lot of entrepreneurs to be funded and new companies and new technology. I hate that Spotify is listed like in New York. Why? Give me a good reason. Yes, because we have not been able to deliver a good enough alternative to that.
That's sort of one example. Also, I looked at the number of successful IPOs in Europe the last 20 years. I think we have had 24 companies today, not 14 companies today, that are worth more than EUR 10 billion listed. Out of those 14, five are from Sweden. In the U.S., I've had 250 companies listed and being of that size in the same time frame. That needs to get fixed. We need to create a different solid base in Europe for development.
You're not alone in saying that. A lot of your American peers, I'm thinking KKR, Apollo, among many, many others, have swooped in to a lot of those deals in Europe. I think Infrastructure deals in Europe have been the hottest thing in the last one or two years. How long do you think that lasts? Is there a believability question when it comes to how long it'll take for that fiscal spend to actually echo through the markets or through the economy, I should say?
Yeah. I think the American firms, they are very fast to move, but they're also very fast to move out. Germany, when we went to Germany 15 years ago, Germany was the hottest place in Europe. And then sort of five years later, it was like a bath club. There were only towels left. Everybody has left. It is the same thing, I think, in Europe. I do not think I can expect a long-term approach from American investors in Europe if Europe is not delivering. That fear, of course, is for the regulators and politicians to look at and care about and take actions to avoid happening this time around as well. I am hopeful that Europe will get there. If that leads to American investors coming here, they are welcome. We compete with them everywhere. We are not afraid of American investors here.
We're probably more respectful and afraid for them when we compete with them head-on in the US. Elsewhere, not much.
What does that do to valuations, though, if suddenly you have these massive players of scale? It's no secret that EQT is a massive player here. If you have global competition from the biggest players in the world, what is that doing to valuations and defense, AI, Infrastructure, et cetera?
Yeah. The more money you have, the higher the values are. As long as you know what you need to do with the companies you've invested in, you can still manage that. We have done that. We have had competition from day one. There is nothing new with it. I think, as I said in the beginning, what will benefit us is that everybody is doing so many other things than investing.
What does that do to investors that are saying that this is a market and this is the juicy returns you're seeing in private equity need to be democratized? Do you see merit to that argument?
Yeah. I think there is, of course, an interesting source of capital coming from retail. I think the rush to retail is dangerous. We need to do it in a careful manner. We need to do it with structures that are allowing the buyers to be educated and that have enough flexibility for it not to become a problem. We have seen some examples of that. We are doing it at the same time. We need to do it in a careful manner. Otherwise, that will be turned against us. I think it's good that it happens.
It's starting to happen, I think, and taking on more effect over in the States rather than Europe. Do you think it's being done in the right way in the States at the moment?
I cannot comment on that. I think normally our industry goes a bit too fast without having really thought through all consequences of what we're doing. I would expect the same thing to happen here. It is important for us that we are not dragged into that kind of approach because in the end, it's like IPO. We have a great brand in IPOs because we have done really good IPOs. Our industry has not. You can differentiate by behaving in a responsible manner if you're doing it systematically. I think the same thing goes for how we address the retail market. If we do it in a responsible way with well-thought-through structures and educate the market well before going out and flushing it with capital or offerings, we can manage that. We, as an industry, have a history of not managing those things too well.
What is the thing that no one's talking about right now? What are we missing? Because we covered a lot.
Yeah. I think this democratization of private equity is an area of concern of mine because it needs to be done in a very mature and responsible manner because it's also public. You cannot hide anywhere. I think that's one thing. I think the other thing is probably that I'm very skeptical. We have been discussing to do investing in credit or setting up a credit business. I'm very skeptical towards that because it's not investing. That's sort of lending money. And that's a completely different business than what we are in. It's also unregulated. We have a big, big gray banking market here. Everybody was pointing at the dangerous gray market in China for many, many years. Now we have our own gray market here.
That could also lead to mishappenings that will have a negative impact not only on us, but also the financial sector and societies in general. There are the regulators and the politicians that are too slow. They are not sort of agile enough securing that these things do not happen.
You sound like Jamie Dimon. He warned about cracks in the private credit market. He compared it to, I think, the mortgage crisis in 2006. Would you say that's a fair comparison?
The subprime, nobody here in Europe knew what it was, actually, when it started. I even had listened to Alan Greenspan in those days. He would say sort of, "Why didn't you alarm?" We did not even measure it. There was ignorance. I think here it is not ignorance. Here, I think it is too much greed, too fast. There is too much money at stake for people to exploit it. For the big banks, they think it is fine because they have somebody that takes the first hit for them. They can lend to the funds and lose less money when the crash comes. The regulators have sort of thought it was a very good thing to take out the systematic risk from the big banks. The regulator so far has been fine with it until it cracks.
Some regulators are looking at it and thinking about it and are concerned about it. I'm sure they won't do anything before the shit hits the fan.
Conni, before I let you go, I've been told you're an ABBA fan.
Of course.
Yeah? Given that we have our Britney Spears mics on at the moment and our headsets, I have to ask you, what are you doing next in terms of music investment?
I cannot tell. It's a very interesting market to be in. The work we're doing now is basically on the existing portfolio and Avicii and on Kiss. Kiss Avatar show will be sort of the next thing, maybe somewhere in the U.S.
How many times have you seen ABBA Voyage?
I think seven.
Do you think you'll see Kiss the same amount of times?
No, it's further away. I'm more of a fan of the Kiss than I was.
Noted. Conni, pleasure to have you. Thank you so much for having me. Conni Jonsson.
Thank you.