(Bloomberg) -- The private credit craze that has gripped the asset management industry and set off a wave of consolidation is yet to convince EQT AB to join the fray, with the investment firm, one of the largest in Europe, content to sit on the sidelines.
“Credit isn’t really an active ownership strategy, it’s highly commoditized, and it’s a volume game,” Chief Executive Officer Christian Sinding said in an interview Thursday, after the company reported its third-quarter results. “We see players out there who want to be everything to everybody, but we are keen to stick to our roots of being active owners.”
The Nordic private equity firm in 2020 sold its credit business to Bridgepoint, which combined it with its own credit business to create an enlarged group that had over €7 billion ($7.6 billion) of total assets under management at the time.
EQT’s stance is contrary to the recent trend that sees some of the world’s biggest alternative-asset managers pushing into credit to offset a challenging stretch for their private equity businesses. Blackstone Inc., which also posted third-quarter results Thursday, said credit was now its biggest business by assets.
The move into private credit has also accelerated dealmaking in the space. BlackRock Inc. is among firms exploring a purchase of HPS Investment Partners, Bloomberg News reported last week. The firm isn’t alone in holding talks with HPS, one of the largest independent managers in the $1.7 trillion private-credit market. Lunate, the Abu Dhabi-based asset manager, is also considering buying a minority stake in HPS, people familiar with the matter have said.
Adding to a spate of such partnerships, alternative asset manager Apollo Global Management Inc. recently teamed up with Citigroup Inc. on $25 billion worth of private credit deals over the next five years. Lazard Inc. has also considered several opportunities to acquire a private-credit firm. Last year, TPG Inc. bought credit firm Angelo Gordon for $2.7 billion.
As for EQT, the firm is very focused on growing strategies such as infrastructure and private wealth, according to Sinding. The buyout firm is also “assessing opportunities in liquidity solutions and secondaries for example - essentially, in areas that can play a role in monetization of portfolio companies,” he said.
The volume of transactions on the secondary market are near all-time highs as private equity firms look to find more ways to return cash back to their investors. Sinding also sees an improving backdrop for mergers and acquisitions as well as public listings.
“There’s a lot of uncertainty, especially given geopolitics, but the momentum in capital markets is reasonably good - we see a good environment for deals going into the fourth quarter,” he said.
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