Owning and developing best-in-class companies
We are a long-term owner, focusing on doing what we deem best for each company. Through our international network, strong brand name and active ownership, we create significant value.
Objective and operating priorities
We are committed to generating an attractive long-term total return, exceeding the market cost of capital. Our long-term return requirement is the risk free interest rate plus an equity risk premium, in total 8-9 percent annually. Our operating priorities are to grow our net asset value, operate efficiently and pay a steadily rising dividend.
- Grow our net asset value: To achieve attractive net asset value growth, we must own high-quality companies and be a good owner, supporting our companies to achieve profitable growth. We also need to allocate our capital successfully.
- Operate efficiently: We maintain cost discipline to remain efficient and in order to maximize our operating cash flow.
- Pay a steadily rising dividend: Our dividend policy is to distribute a large percentage of the dividends received from the listed core investments, as well as to make a distribution from other net assets corresponding to a yield in line with the equity market. The goal is to pay a steadily rising dividend.
We are an active and long-term owner. Through substantial ownership and board participation, we drive the initiatives that we believe will create the most value for each individual Company.
We have a long-term investment perspective and support our companies in their efforts to create sustainable value. Our goal is to build strong and healthy, best-in-class companies. We aspire for all of our companies to perform better than their peers and to reach their full potential. However, our companies are diverse and therefore with different opportunities and challenges. Accordingly, we treat each company individually and independently.
Our model for active ownership is built on substantial ownership. We own significant minority stakes in our listed core investments, and are often the largest shareholder, as it enables us to influence board composition and impact key strategic decisions. Our subsidiaries are owned by Patricia Industries, which offers management teams and boards co-ownership.
What we invest in
We own companies within engineering, healthcare, financial services and technology; industries we understand well, and in which we can utilize our experience and network as well as our financial expertise.
We have a long-term investment horizon focusing on “buy-to-build”, with no exit strategy. Our base case is to develop our companies over time, as long as we see further value creation potential. Our business teams are responsible for regularly updating our view of the long-term fundamental values of our companies, serving as the starting point for our investment decisions. Our capital allocation focus is to invest through our existing wholly-owned subsidiaries within Patricia Industries and finding new ones. In addition, we will continue to strengthen our ownership in selected listed core investments, and invest in EQT’s funds. While not part of the strategy, if we arrive at the conclusion that a certain company no longer offers attractive potential, or that it would be better off with another main owner, we actively drive an exit process in order to find a better owner for the company and to maximize the value for our shareholders at the same time.
Long-term value-creating investments
We actively support all our companies in making long-term value-creating investments, which means that we are willing to sacrifice short-term profitability for longer-term value accretive investments. It is our firm belief that to become or remain best-in-class, companies must have the ability to invest in innovation, regardless of pressure from market or external forces. However, our long-term perspective is never an excuse for weak underlying short-term performance. Through our financial strength, we enable our companies to make the right investment decisions – at the right time. Access to capital, in combination with sound ownership and governance, creates opportunities to invest for the long-term.
While we do not actively seek new investments within Listed Core Investments, we do not rule out additional investments should attractive opportunities arise. Patricia Industries constantly scouts the market for new companies to acquire. In addition to the industries we are invested in, new investments can be made in, for instance, infrastructure and business services. However, the main priority is to further develop and build the existing companies.
In any new investments, we look for certain characteristics; high-quality companies with strong market positions, flexible business models, strong corporate cultures, exposure to growth markets, strong cash flow, continuous focus on innovation and R&D, exposure to service and after-market sales and sustainable business models.
Cash flow platform
Over the past few years, we have established a strong cash flow generation through Patricia Industries’ wholly-owned subsidiaries. This cash flow, together with the dividend from our listed core investments, allows us to finance investments in both existing and new companies without divesting assets. It also allows us to pay a steadily rising dividend.