Investor Update

Mar 19, 2020

Press Release

Welcome everybody to this call, and, wanted to introduce the team who's gonna be on the call. First of all, here is Christian Sending. I'm the managing partner and CEO of EQT. Together with me on the line, I have Casper Kallstrom, our COO, Kim Henriksson, our CFO, also Riesberg, head of shareholder relations, and Pavel, who is, also a director in shareholder relations. First of all, I wanted to start with hoping that all of you and your families are well and safe in these turbulent times. And our priority similarly in in in during this period is to ensure that all of our staff and all our families and our other stakeholders are staying safe and healthy. Operationally, we've decided since more than a week that all EQT employees across the offices in Europe, UK, and The US actually work from home as much as possible. And that means that the majority of EQT's offices are still operational but at a much smaller scale. Luckily, thanks to our strategy of future proofing ourselves, we have, an extremely modern digital setup and modern tools to work and collaborate remotely, and it actually works very, very well across the firm. We are completely cloud based in in all of our software solutions, and that means that people can work effectively from any device and any location. And today, that's obviously extremely helpful. Furthermore, we we have very, very strict travel policies now. There is basically no travel, and we, of course, encourage video conference meetings rather than physical meetings, and also even rather than telephone meetings as we want people to engage with each other as much as possible by seeing each other live. This call is is really intended to give you an update on EQT and our and our funds as well in light of the current market turbulence and the COVID nineteen pandemic that we have now. So I'll start a little bit, and then Kasper will come in, and Kim will round it off. So, a little recap on EQT first. We are a purpose and culture driven private markets firm, with really people, at our core, and that's important in these times. More broadly, we have around €40,000,000,000 in fee generating assets under management, and these are mostly in private equity and in infrastructure. We've been operating for twenty five years. We've been through a number of cycles and crises before. We have about 700 people present in 19 different countries around the world, and, we have our you know, our people are split basically 50% between those working with, transactions, and portfolio companies and clients, and 50% of our personnel are working to support, in in the best possible way, our operations. Our market that we're operating in, the private market, is an attractive long term market. It's expected to continue to grow for the longer term, 10% per annum or more, And this is obviously generated by the performance that's driven that we drive in our investments, and that we provide to our clients, and we've generated around 20% net IRR, since our inception and around two and a half times multiple investment costs. Our vision is to be the most reputable investor and owner, and that's even more true and more important in today's really volatile market. And we we do invest for the long term, and we want to act as a responsible owner in both good and bad times. So with that as a backdrop, I wanted to share a few observations on the current market environment. Our funds portfolio is fairly robust. The composition of our funds is a reflection of the thematic investments that we've been pursuing for a long time. We have a focus on on noncyclical companies driven by long term macro trends, long term secular trends, such as the continued digitalization of our society, demographics, lifestyle, even regulatory trends, trends that are not necessarily connected to the economic cycle. And if I look at the private equity side, the equity portfolio, and our equity funds is focused on the preferred sectors of health care, TMT, and services. That's roughly 90% of the capital in those three sectors. When I look at our infrastructure portfolio, around 50% of the capital is in fiber infrastructure, and, all of the companies there are providing essential services to society. When it comes to leverage, we have been structuring our new deals over the past years with a range of anywhere between three times and seven times EBITDA. Typically, we don't max max out leverage. We typically don't use holdco, pick notes, etcetera, and we typically don't, you know, continuously leverage our companies to take smaller dividends. This means that we have, you know, somewhat more conservative capital structures than most. Even in some companies, have no leverage if they are growing very rapidly. And if you look at our overall financing structures, we have about 75% of them are in covenant light structures. And those where we do have covenants, those are mostly in the Nordic region with relationship banks, where we have a really good overview and and very good cooperation, with with our relationship banks. Now in addition, over the past twenty four months or so, we've been talking about the storm is going to come at some point in time, and that means that we've prepared for a downturn for a long time, and we've actually refinanced a large part of the portfolio, removing covenants and pushing out maturities. We've also pushed out yeah. Sorry. Pushed out maturity. We have also, for some companies now, we have drawn down the revolver to be prepared for a more complicated time. But I'll I'll get back to you. And so, well, Casper, we don't see a need for that in all of our portfolio companies, and we really work on a portfolio company by portfolio company basis together with our financing providers. And, basically, we have three different types of companies that are affected by the crisis in in in different ways. First, we have those that are temporarily impacted, and this is where the underlying trend trends in the sector are still intact, and they'll have a temporary hit, but the companies will actually recover foregone profits. The second category is temporary but lasting impact, where the underlying trends will are still intact. There'll be a temporary hit, but the companies will not recover their foregone profits. And the third element is the ones that have a structural impact where there are structural changes to demand in that sector that are accelerated by the crisis and and where the underlying trends actually don't come back to a, you know, to a real positive future. Those that are most affected in the final category are right now well, actually, this is a slightly separate point, but the most affected sectors right now, short term, are, of course, travel and leisure, oil and gas, and retail. And those sectors consist are in total, less than 10% of our total portfolio across the EQT funds. This is another way to describe why the line part of our portfolio is robust for the long term. Furthermore, with what we currently know, we will need significantly less than 5% of our total fund capital to support the companies in the equity and infrastructure portfolios. So that means that with our level of invested capital today, we have plenty of dry powder to support our businesses. Furthermore, we have the people, the resources, and the talent to work with our portfolio companies and to look at new transactions, as Casper will come back to. And we have a large network of of senior advisers that work with all of our portfolio companies around the world. We have very strong professional boards with industry specialists and very strong management teams, and and and everyone around us is, of course, helping to, to handle this current challenging situation in the economy. So with with that introduction, I'd actually hand over to Casper, who will, you know, continue and talk about some other elements. Okay. Thank you, Chris. And I think, we have obviously tried to learn a lot from the previous crisis and mainly the financial crisis. We as Chris alluded to, we have, in the past two years, worked quite a bit on the portfolio side to put plans in place or to put plans in drawers, you can say, in all our portfolio companies. And those are the downturn plans that are now taken out from the drawer and then actioned upon. And I think our experience from historical crisis is that action is of effort and that you move quickly and take decisions. And therefore, it's essential to have not to be forced to haggle about what you should do, but everybody knows, and it's just execution. And I think so the portfolio companies as well as our staff has sort of been mentally prepared for a downturn. On the deployment or investment pace, I think it's pretty clear that the pace will be impacted, especially in the short term. We expect that the current market turbulence today will lead postponement or a significant slowdown in this. For how long this will last, it's hard to predict. We will see. But right now, the market for financing new deals is more or less closed. However, as we saw in 02/2008 as well, this new environment can also open up for new opportunities. But that said, the main focus right now at the moment is on the current portfolio. On dry powder, key funds are 70% to 75% invested, which means we have capital to support our company as well as capturing any new opportunities that may arise in the current situation. This will also impact our exits. As we said in the Q4 call, our exits are tilted to the second half of this year. So we're continuing with exit preparation, but the market obviously needs to recover for these exits to happen. And time will tell. But that said, we have a young portfolio. Our oldest portfolio company is roughly eight years old in our portfolio, and that is Antiseumix, which is also one of our stars and strong performers. So we have no pressure whatsoever on us from our investors or legally or anything else to be selling any assets. So we can sit on the assets for quite some time before we come into any sort of problems in that area for years. We also a reminder to you, we don't have sort of open ended funds. I mean, these these are closed end funds, so we don't have any outflows or anything like that. Our fund capital is committed for ten plus years, which means that we would rather wait for a market recovery and generate returns and carry than to sell at a low valuation. On the fundraising side, as you've seen, we announced last night or this morning, depending how you see it, the hard cap on EQT nine at EUR 15,000,000,000. This, we you should have anticipated. We talked about that in January. And what this means is that we have now then communicated to our LPs, our investors in the funds, that the maximum amount of commitments that are going to be accepted in equity 9,000,000,000 is then 15,000,000,000. And as usual, this is basically the only thing we are allowed to say specifically about the fundraising of EQT nine. But what we can say is, of course, fundraising in general would certainly take longer time in this environment than it would in the environment we had three months ago. So I think with those words, I'll hand over to Kim, our CFO. Thank you, Kasper. I'd like to spend a little bit of time and say a few words on how all of this will affect EQT AP. And let's start with a a reminder on our financial model, how it works. So we have two kinds of revenues. We have management fees, and we have carried interest carried interest and investment income. And the management fee, which is the vast majority of our revenues, firstly, it's calculated on committed capital in the funds that are in the investment phase, and then it's on invested capital in the post investment period in older funds. So at no point are the revenues based on market values in those funds. It's also worth mentioning that our fund investors have never defaulted on a capital call during our twenty five year history. So that is not something we expect to happen. The second part of our revenue stream is carried interest. And under IFRS, carry recognition will require recognition will require an underlying positive development in the fund valuations and or an exit of portfolio companies. And it's too early to quantify at this point. But if this turmoil continues, it will have an impact on the timing of carried interest recognition. So carry recognition may be delayed, but not canceled as also Kasper alluded to. This is very important that we are focused on the not the IRRs, but the money multiples instead. On the valuation side, we have a very structured quarterly process for valuation of our portfolio companies. The quarter has not yet closed, so the valuation process is not yet finalized. So no further comments on that at this point in time. Together with Kari, we also report investment income. It's a very small part of our earnings or our revenue for now, but is based on mark to market methodology. So may be impacted more directly by the market turmoil. We currently have invested roughly €70,000,000 out of our balance sheet as of year end. As you know, our cost base is largely our employees, and our long term plans to grow the firm obviously remains. However, the practicalities around hiring is likely to impact the hiring speed where where people work from home and do not have the possibility to meet in person. So our growth in people is likely to slow down from what we had expected. This is not going to impact immediately because people commencing in the next few months have already been hired by now. So this is a slightly longer term potential impact. We will also have lower travel costs for a while as people work from home. That's on the cost side. As you remember, we did announce a review, a strategic review of our credit segment in January. There are no change to those plans. As we have communicated earlier, we will revert before the summer then with the outcome and conclusions of such strategic review, and that is still the case. And finally, as there is very much focus on liquidity and balance sheet strength, worth noting that with relation to EQT AB, we have a very strong balance sheet and a very strong liquidity position at year end, approximately €900,000,000 in cash. And with that, I'd like to hand back to Chris for some concluding remarks. Thank you both, and thank you everyone for listening in. Please stay safe out there, and let's hope that we all get through this difficult situation as soon as possible. With that overview, we are then open for for any questions that the audience might have. Thank And our first question comes from the line of Peter Kusiakov from SEB. Just a few questions. The first one is on perhaps the ability to invest in this environment, and that, of course, relates to the fundraising of EQT nine. Given where markets are today, I mean, would you and let's assume that this is this continues for throughout the year. Do you think that there's any ability of you to invest capital further within these funds? Or are the markets pretty much closed, meaning that, of course, the fundraising of EQT nine would be something that comes into 2021? That's that's my first question. Mhmm. Okay. I'll take that one. You know, it's of course, right now in the middle of of the crisis when there's so much uncertainty, it's, it's hard for sellers and buyers to meet. That's just the reality. You know, for for midsized transactions, you know, we're actually not we're actually not dependent on the financing markets because then we can use our own equity capital. So we have the possibility to do transactions, and we are working on a number. You know? And there are interesting opportunities out there like, certain public companies that could be interesting, that, you know, certain sellers that are maybe even more distressed or would like to refocus their resources. So, you know, we're actively looking. And, of course, as as you know, we we follow the investments that we're making. You know, we've typically followed the companies, and the sectors for years. So, though, it's hard to say exactly how many investments we're gonna be able to do in this in this marketplace. We, of course, hope that once things stabilize, what our experience was from the last crisis was that when things stabilize, then actually sellers and buyers can meet, and you can start to transact. When it's as as, you know, as volatile as now, I would say it's, you know, relatively unlikely, but there there might be one or two situations that are, possible to to convert. And, when it comes then to the fundraising, the fundraising itself, of course, is one process, and and Casper can talk a bit more about that if you like. But the of course, we're we're not activating the new fund until the previous funds are fully invested, and they're typically fully invested between 8090%. So, those are the two equations. And right now, I can't tell you, you know, exactly what the timing of that will be. That's probably on anything. Okay. Yeah. Go ahead, Peter. No. No. I think you covered it well. Okay. Yes. Just if I just follow-up on that question. Terms of valuation levels, given where kind of if you take equity markets as the proxy for how valuation perhaps within your portfolio has developed, are the valuation levels any issue in terms of getting buyers and sellers to meet and perhaps for you to sell or exit companies and thereby generate carried interest to the level where you would be satisfied and that is in line with your with the targets that you've set out for your funds? Yep. When it comes to exits, you know, the same thing applies. You know, when there's a huge amount of uncertainty as of right now, then we're unlikely to execute on any exits just because it's you know, we're not under pressure, as Casper said, to sell, and we wanna make sure that we deliver the best possible long term returns for our investors, and we're quite comfortable with our overall portfolio as you heard. So so, again, you know, we need some kind of market stability for for access to happen. And and, of course, you can you know? And when that happens, you can exit those companies that are in very healthy sectors and are performing in a strong way. And those that have been more affected, they're you know, we're gonna have to continue to work with them and and keep them for the longer term. And Casper might wanna make a comment on the valuation. Yeah. I I I think I don't think it's I mean, the stock market is maybe not the perfect proxy, to be quite honest. And the reason for that is, of course, if I play with the thought that we launch a public tender for a company today, would we be able to buy that company with a 30% premium? And I would say probably not. So the price of an entire company is something different than a price for a marginal share. So of course, the price of a full company is affected, but not to the same extent as a marginal share, I would say. So maybe a bit theoretical, but I think it's actually true also in practice. So and and that is also why it's a little bit difficult to to meet with the buyers and sellers when you have this high turmoil and high uncertainty. And as things calm down, you typically find where the the correct price, clearing price in that market is. Okay. And then just perhaps a final question. In terms of the hard cap, which is very close to the target AUM, when looking at previous fundraising And if we, I guess, go back to EQT eight and maybe seven as well, the raised amount of capital was a few billion euros above the target that you set out. Should we how should we view the hard cap that is now set? Is it a reflection of that perhaps in these volatile times, it's difficult to raise much more capital than the target and perhaps just achieving the target is good enough? Or is it that perhaps the size of the funds are becoming so large now that you don't really want to take in more capital because in the end, you need to generate returns on that money as well? Your questions are good, but it's you can't really extrapolate the past because every fundraise and every market situation is different. The way I think about it is that, you know, we set a target here which we were happy happy with and which we think fits our, you know, investable set of companies and which we think we can deliver an excellent return around over the long term. And and now we set the hard cap slightly above that. I think what you also should look at is and I think as we indicated before, you should also look at the the increase in size and absolute numbers from fund to fund. And, you know, the the percentage increases are one thing. The the absolute increases are another. But I think the way we you know, we we are you know, I think we are quite happy with with ending up at the hard cap, and that's what we're gonna be working on for, you know, for the foreseeable future. Alright. Thanks. Thank you. Thank you. Our next question comes from the line of Magnus Andersson from ABG. Please go ahead. Your line is now open. Yes. Hi. If I could just follow-up a bit on the fundraising. Casper, you mentioned that obviously the fundraising of EQT nine now could take most likely would take longer than it otherwise would have done. Can you tell us something also about the potential size and fee pressure? Are you already now feeling that clients that are hit by public equities are becoming overexposed and thereby by that demand for alternative investments are going down and that we potentially, therefore, could end up below the SEK 15,000,000,000? And also anything on negotiations, say, on terms, what would it take for clients to start to become more aggressive on management fees, hurdle rates, etcetera? Are we there yet? Or I think I can start answering, and Chris, if you fill in if you want to. I think when it comes to the size of the fundraising, I think we just went out with a hard cap, and that is what we're striving to achieve. That is it. I think when you talk a little bit about the allocations to PE in general, it's something that you could see a little bit in the financial crisis, which is called the denominator effect. So meaning that if you have significant movement in stock prices, you become over allocated to a little bit less price sensitive private markets. And therefore, we it was tougher times. I don't think we're at that point now. Of course, if this continues with another 30% down, then it's a different story, but we're not there now, not that we can see anyway. And I don't think it's the allocations to I mean, our investors, they are very professional. They're very long term. They don't change strategy from one month to another. So they typically have a target allocation that they're working towards in good times and in bad, but it's not sort of a blip in the curve will not change that. Now we'll see how much and how deep this downturn will go, anyone's guess. And the same goes for fees then, I guess. You're not if you're not worried about size, you're probably not worried about fees either. I think we said that we are going out with fundraising on substantially the same terms as the last fund. And I think we stick to that wording, and that's what we believe. Our next question comes from the line of Arnaud Gibler from Exane. Yeah. Good morning. I've got a couple of quick questions. So firstly, on the mechanics of fundraising. So you've got several closings, and I think it's at the point of the first close, which makes reference and any further closing thereafter are subject to to late fees. Is that right? So, I mean, I suppose the key milestone we're looking for is the the first closing. That's my first question. And secondly, a couple of months ago, you were talking about bridge financing for solutions to raise more capital until the next infrastructure fund is raised. Does that still remain valid in this environment? And are we looking roughly to 2021 now? Which part of 2021 could you foresee the raising of infrastructure fund size? Thank you. Thanks. I'll I'll answer the last question, and then Casper can comment on the first one. With regards to the to the to the, to the bridge, which we call a, parallel investment vehicle, the PIV, that process is ongoing. And it's also a, you know, a fundraising process, so I can't comment on it other than to say that it's ongoing. And it probably also you know, the general statements we're making probably also or definitely also apply that, you know, all fundraising will now, you know, take a little bit longer both for both because of the, you know, status of the financial markets, but also just practically, the way that everybody has to work now is, you know, is obviously over digital solutions, etcetera. And and therefore, I also won't make a prognosis as to, you know, the the timing of the next infrastructure fund. You know, it's 70 to 75% invested, the current one, and we typically close funds somewhere between eighty and and ninety. And so when that is done, you know, we've typically started fundraising by by that time period. But, you know, to give a prognosis right now of of any timing would be, I think, yeah, if not possible, then then I think you'd be giving me kind of the dynamics around it. Casper, do you wanna take the mechanics of the fundraise? Yeah. Sure. No. I think you're right. So basically, the let's say, are from the first close and onwards. Our next question comes from the line of Liz Meliathis from Bank of America. A few questions. Firstly, on the EQT front line. On the first close, I'm not sure if you're allowed to mention it or not, but have we actually had the first close? The second question would be given the current environment, would you be interested in potentially looking at a distressed fund and raising a fund in that sort of strategy. And then finally, Kim, you mentioned that there may be a slowdown in staff hiring for this year. I think we've hired 400 FTEs for 2020. Are you able to give us, you know, maybe an approximation of will it be 70 or 80 people or or what that what that number might look like for 2020 and even 2021? Thank you. Thanks. Regarding the fundraising, we're we're just not at liberty to say because of primarily because of American securities marketing rules. So I don't think I can I don't think I'll be able to help you there, unfortunately? On the on the third question, Kim will step in. On the second one, we have we have two ways of investing in in either distressed securities or distressed structures or, you know, in companies that have a distressed balance sheet. One is is through our, you know, our private equity and infrastructure funds. We have a capability there to to buy, companies that are in distress, but those strategies would focus on companies that are where the company is actually healthy, but the balance sheet is struggling, rather than, you know, an actual, you know, looking for a turnaround or distressed companies, which we which we which is not, kinda EQT's core strategy in any sense. We do, however, have a a credit fund, Credit Opportunities three, which is which is investing in distressed securities and also has the ability to do, you know, loan to own type of strategies. And they're, of course, very active in the market right now. It's Kim here. And to comment on your third question there. So as I mentioned, for H1, the change in hiring speed will really not have any significant effect because those are already signed up and it's more a question of when do they start. And then after that, it's anybody's guess how long this will last. But if we are back to normal soon thereafter, I would not expect a big change to the earlier communicated pace. And if this continues throughout the year, then the hiring pace will be significantly slower, I would say, in the latter part of the year as well. So anybody's guess, I'm afraid. Okay. Thank you. Can I ask just one more question? I suppose the credit business is still under review, but is your is the review potentially going to be changed due to the current environment, or is your view of that credit business, has that changed due to the current environment? Thank you. So I may may I no. There hasn't been no no no changes to the to the to the review or or or the or the process that we are discussing there. That's that's all underway as planned. Yeah. Thanks, Kim. I was on mute. So I agree. Thank you. You. Our next question comes from the line of Per Jorgensen from INT Asset Management. Please go ahead. Your line is now open. Yes. Thank you for taking my question. This slowdown has come very quickly and very much abrupt. If you look at your experience from former crisis, do you expect to see any catch up effect in either selling or buying companies? That's my first question. My second question is on the pipeline management. Do you see any reason for changing that? Do you see an acceleration in looking at companies so you can act maybe more promptly when the Frontline has been launched? That's my second question. My third question is actually you have mentioned before that 2020 should be seen more as an exit year due to valuations and all that. And now the market has suddenly turned. Do you see a more aggressive buying later this year? Thank you. Yes, thank you. Good question. You know, with the with regards to the catch up effect, you know, of course, nobody knows exactly how how the the how and when the economies will come back, but they certainly will. And and like you heard, our portfolio is is skewed towards what we believe are the are healthy long term trends. So, yes, typically, a, you know, a period of time where there's been, you know, very little happening, I would expect that there's, you know, some activity, but I think it'll be it'll be it'll probably be very spread out according to different regions and different sectors. So in some sectors, I think activity will, like, come In other sectors, it will take take longer. That's at least the experience that we've had from from other crises. And, Hank, together with your next question, the pipeline management, yeah, the way we work is, you know, we work we work we're kind of on the access of local with locals and and and and thematic investing sector based investing on the other one. So where those two meet, you know, we're we're following companies for a long time. I I don't remember exactly the number, but but if I remember right from EQT eight and EQT seven, I think we've been following those companies for an average of four to five years, you know, before we actually, invested in them. And, and that that means that our pipeline management continues irregardless of the cycle. And, and then we're what we have to do, of course, though, is be you know, when there are things that are uncertain, and now we have to be extremely selective For for the reason we discussed earlier. And then on on third question on the exit year, the the yeah. I think Casper also mentioned it in his overview. You know, we are not under any pressure to sell, and we think it's very difficult to sell any assets in in this environment. So and that's probably gonna take some time before everything comes back. So I would expect exits to be you know, exits are what we said in q four, I think it was that exits were pushed back into the second half, and that might be further pushed. There will be fewer exits later. Yes. Okay. Just on the fundraising, I know it's not a topic that you want to discuss too much. But are there any changes in the dynamics? Because a lot of clients coming into the EQT nine, they know you from the seven or six and so on. So is it not to say that it's easy to do fundraising, but the clients know you, so you don't need to meet up in person and so on. Is it a way to get the fundraising done? And the reason that you actually today send out a message about the hard cap? Are there any changed dynamics as you see it? Changed well, I think the changed dynamic is that the overall fundraising process will take some more time, both because of the disruption that's happening in the markets and because of the practicalities. Now we started our fundraising of EQT nine in in January, so, of course, quite a lot of work has already been done. But I don't think I can comment much more than that to see if any of my colleagues wanna add anything. No. I think it's it's difficult to say much more. But because of regulation, we cannot comment on economics and on fundraising. Fair enough. It was not to get a feeling about that. It was just the dynamics that was what I'm after. Yes. And I think I mean go ahead, Kasper. Yes. To answer your sort of broad questions, I think what we see is, of course, that the vast majority of the investors in a fund typically are coming from an earlier fund investment, so a re up, as we call it, in in our lingo. Yep. And and and I I would say that that would be valid for all our flagship fundraising. So that's probably more than a majority. A vast majority of the money is coming from old relations. Yes. Good. Okay. Fair enough. Thank you. Thank you. Thank you. Our next question comes from the line of Gurjeet Campbell from JPMorgan. Please go ahead. Your line is now open. Hi. Good morning, guys, and thanks for the update. Just a couple of questions. Firstly, in terms of the business now, are there any sort of significant differences between 02/2009? Obviously, you weren't listed then in terms of either the size of the companies you're investing, perhaps the mix, just to give us a sense of maybe were there any funds that missed the targets last time? That's sort of the first question. Secondly, just on the secondary market, because I suspect there'd be quite a lot of opportunities where other managers or investors are lacking liquidity, which may opportunities for somebody like EQT who has clearly more firepower. So what are you thinking about that? And then just finally, just Kim for yourself, is there any part of the portfolio or the balance sheet where there could be any sort of even small mark to market adjustments that we need to factor into our, numbers. K. I'll I'll take the first two, and then Casper can take the third one. And thanks for joining, Tegurgy. The the side know, the I think the main difference between, you know, the previous cycle or, you know, say, before the great financial crisis and now is that, we are you know, since the the financial crisis, we've actually been investing thematically, as you've heard us talk a lot about, which means that we've we've worked to avoid, you know, cyclical exposures. We've worked to avoid, you know, highly capital intensive industries, and we've tried to find, investable trends which are not related to the to the economic cycle so much, but rather, know, other trends. And and therefore, we have investments in in, you know, a lot of fiber and broadband. We have, veterinary care, and, we have a number of health care companies, pharma, med tech, etcetera. So so that I think is the is is a big difference. And if you look at our portfolio, you know, you know, fifteen years ago, you know, we'd had a we had a broader spread where we also had, you know, building products and and other types of companies that were you know, had more cyclicality and and, and more capital intensity. So, so that's it. And, but even so, the, you know, the main fund, the flagship fund that was invested, you know, mostly before, the financial crisis happened was EQT five, and EQT five delivered, two times MOC. So that was, you know, that was an o six vintage, which they also called the vintage of death in private equity, and in that vintage, we delivered the top quartile return of two times. And, sorry. On the secondary market, the, definitely. And and there are, you know, we are but we're working the same way. You know, we're we're working thematically and locally together, and, and we're talking to a lot of different sellers these days, and we wanna be as well positioned as we can to, to make those kinds of transactions happen, if that was your question. Yeah. That's great. Thanks. Yep. And and to answer the mark, yes, the mark to market adjustments, and I think we have according to IFRS financial investments, you are valuing on a mark to market. We have, at year end, roughly €70,000,000 on our balance sheet in financial investments, I. E, investments in our funds. Maybe that's slightly more in Q1, but that's sort of the basis on which you will see mark to market adjustments in the Q1, that we will see that. Okay. That's very helpful. Thank you. Thank you. Our next question comes from the line of Mike Werner from UBS. Please go ahead. Your line is now open. Thank you very much. Most of my questions have been asked, but I do have one additional. I guess, in previous private equity funds, EQT seven, eight and maybe even going back to six. I was just wondering what the breakdown was in terms of existing clients versus new clients? I percent of the the committed capital came from clients from your predecessor funds? And what percent of were were were essentially new clients to EQT at the time? And and I guess as a potential follow-up, you know, what are you targeting? Are you targeting kind of a a specific mix for for EQT and I? Yeah. Well, Casper, you wanna take that one? Because we I don't know exactly what we what we disclose and not disclose. Yeah. I I can take because I I know what we disclosed in the press release of EQT8. We said that new that we had existing investors with coming from 70% in in the equity fund previous the previous equity fund, equity seven, that is. So 70% was the was old money, you can say. Yep. And I think in infra, it was 80. 80 five, I believe the number was, in infra four. That gives you kind of a range to work with. Thank you. That's helpful. And, and with regards to the target mix, it doesn't it's not really it doesn't really work that way. What we're what we, of course, try to do is keep excellent relationships with our existing LPs and over time also bring in new LPs that we think are a good fit for us and for them, you know, as we as we grow and develop. So, we don't really think about it in terms of a of a target mix. Okay. Thank you. Thank you. And as there are no further questions registered at the moment, I will hand the word back to our speakers for final comments. Please go ahead. Thank you. Thank you everyone for joining on short notice. We appreciate it, and we look forward to staying in touch. Have a great day, and and stay safe out there. Thank you.