I'd now like to invite Christian Syninding, CEO of EQT to join us. Under his leadership, EQT has quadrupled in size, became Sweden's fourth largest listed company and a leading forwardinking organization in private markets. Welcome, Christian.

Thank you. Good to be here.

So Christian, what defines a truly great company for EQT?

It's the favorite question uh of the year I would say. Uh so interesting actually that I did a poll of uh of my colleagues uh the call the top investors at EQT and um and it came out very consistently actually into three three different categories.

Um the first one has to do with the industry or the sector that the the company is in. And uh what we've sharpened over time is is to find long-term themes in society that are not dependent necessarily on the economic activity but on some other drivers like digitalization of society, decarbonization of society, aging society, those kinds of broad themes that are uh you know going to run for a long long time. uh behind that infrastructure actually is spoton in there.

Um then you go to the company uh and we're looking for companies that have a great business model uh recurring revenues in some form some kind of competitive moat if you want to call it that to use your language um competitive advantage uh and something you can continue to build on um that has lots of opportunities to grow both organically through acquisitions and change. That's kind of category number one.

Cate category number two is um leadership. So a couple of colleagues said CEO CEO CEO. Uh and um and of course we own the companies, we control the company. So we can install the board, we can install uh the management if if it doesn't already have a great one. But I think it's broader than CEO. I think it's the leadership group. It's the uh it's the organizational design of the company. It's a cultural health. We we heard a lot about these things earlier today.

um you know culture beats strategy for breakfast as they say and I think we heard that from David and others uh very much true for EQT uh so that's kind of that's category number two maybe also ability to attract and retain talent very important category three is we also heard about from Otis and others um and even over Nordisk it's actually the ability to take you know the position that you're in the strategies that you have the leadership group that you have and execute relentlessly um and drive you know a culture of continuous improvement.

So it's not good enough just to be a visionary, great CEO or have a great team. You also actually you know to drive execution every single day. Um and if you think about the four companies that we heard about this morning uh you find those themes across all of them in in various forms, right?

Yeah. It sounds like they put a bit more emphasis on leadership than Chris does in his approach. What are you looking for in a CEO and in the leadership team?

Uh I'm looking for someone who has a vision. Doesn't have to be vision area, but someone who has a real vision. Where are we taking the company and why? Um someone who can bring people together uh who can inspire uh but also be sharp enough to execute. So combining those two elements I just talked about um I think uh the ability also to to change your mind if a better argument comes uh and have this mindset you talked a little bit earlier about how do you deal with technological change and threats um and to have the mindset of we we call it a future proofing what does the company need to stay ahead of the curve what threats are coming what opportunities are coming right now it's AI then it'll be AGI and then maybe quantum computing whatever all these things are impacting business, sustainability, decarbonization, all these, you know, how do you deal with that? Do you wait to see what happens or do you take the bull by the horns and actually drive change? Mhm. Uh those are some of the elements that we're looking for. Um and then not complicating things too much. Mhm. Sticking to what's important. Mhm.

And have this mindset you talked a little bit earlier about how do you deal with technological change and threats um and to have the mindset of we we call it a future proofing what does the company need to stay ahead of the curve what threats are coming what opportunities are coming right now it's AI then it'll be AGI and then maybe quantum computing whatever all these things are impacting business, sustainability, decarbonization, all these, you know, how do you deal with that? Do you wait to see what happens or do you take the bull by the horns and actually drive change? Mhm. Uh those are some of the elements that we're looking for. Um and then not complicating things too much. Mhm. Sticking to what's important. Mhm.

You mentioned long-term themes. Chris, is this approach that Christian takes on investing in long-term structured themes something that resonates with you?

Yeah. The the average life of a of a holding of our current portfolio is 80 years. Mhm. Now, the average holding for a of a US stock is less than one year. So investors are absolutely on mass short-term um trading oriented.

And so why you know it it but we should ask well why is long-termism is it a good strategy? Yeah. Is it why and why I'd like to think it is. Yeah. Well we should ask the question why. I always say justify. Yeah. Yeah. And if you look empirically, it turns out that the very best companies, high rises, they they stay good. They don't disappear o overnight generally. Yep. And bad companies stay bad. Lower stay low.

I totally agree. We have an expression. Good companies are better than they seem. Bad companies are worse than they seem. There's persistency.

It's better. You got to get rid of the bad ones and just double down on the good ones. Yeah, there's persistency and and the value of that company is only seen over the long term. So you get they say there's no free lunch in finance, but actually I do think long-termism in a great company is a free lunch because the the if you look at any sellside model, they'll go out three years if if or or two years. And that's why because that's the time horizon of the typical buy side investor. One, two, or three, one or two years. But what if it can keep being good for 30 years? Then you're completely undervaluing that company.

We, you know, we um and and people don't look at it because there aren't most companies 95% of mediocre or bad companies. Yeah. And they meet their cost of capital, but they're not super companies.

you know, one of the companies I mentioned, aerospace, we invested in Saffron. We've owned it for 13 years now and in in in we're actually one of the largest investors in the company. And uh um and we made around more than a 20% IR for 13 years. It's a long period that duration. Very long. Yeah. Very long period. What company was that? Saffron. Mhm. Yeah. They're a joint venture with G Aerospace in aircraft engines and um and so um we have investors who come in and say well we want new things.

Very long. Yeah. Very long period. What company was that?

Saffron. Mhm. Yeah. They're a joint venture with G Aerospace in aircraft engines and um and so um we have investors who come in and say well we want new things.

Yeah. Why is it so hard for investors to be long-term? I understand they're commercial pressures but there must be they think new is better. I think you volatility. Yeah. Yeah. Yeah.

You know one of the I'm obviously interested in the private markets. One of the benefits of the private market is you're kind of forced to invest for the long term. We own companies. We own them for 5 to 10 years at a time. Now, we're actually starting to own them for longer because we realize that winners need to be owned longer to really uh get the maximum value creation out of them as well. Um but uh but but you're kind of forced to invest for the long term and and even in these products that now individuals can invest in in our industry uh they're also very long-term in their nature and um you know our valuations aren't as volatile. You can discuss why but uh but it is because that we're not that interested in what it's worth right now. We're interested in what the companies are worth. You know when we buy a company we're interested in what it's worth in five years or in seven years and what we can do with that business in the meantime. Yeah. And in the extreme, we don't even care what it costs so much today. As long as we know that we can take it to here or we're highly confident we can do that with time. That's that's actually more important than what we pay 100 or 110 today. Doesn't really matter if you create four or five or 600 up here later.

So how do you do that? You identify a company that you want to buy. Y pay a price that you're happy to pay. Yeah. And then what's the playbook to create the value?

Well, the the playbook that we're trying to industrialize is is we create a full potential plan for the business. We kind of dream say if this company had every resource in the world uh to be able to grow develop and go to the next level uh h how what could it look like you know if you did all the M&A you wanted to do all the innovation uh you get rid of the things that aren't working upgrade the organization improve the margins all that kind of stuff um okay so that's the full potential uh what can we actually get done in in a reasonable time period with the people that we have involved either globally or in the company or whatever um we bring lots of resources it for the company whether it's governance or IT skills or AI skills or sustainability skills or expansion or M&A whatever the company needs we try to bring those resources in uh and and then we push the gas pedal pretty hard and and and we go for it and we very often don't meet the full potential plan but that kind of mindset helps you drive the company forward um and uh and and really and also really deciding which are the big things a little bit like Nova Nordics Nord Nordics we heard earlier um what are the big initiatives that can really make a difference and then making sure that you put the best people behind that enough capital behind it and those things that's that's what we can do in the in the private markets and it's a lot of fun.

What can you do in the public market as an activist and your approach has evolved a little bit over time yeah

it's an interesting debate private versus public um and you know what, um um because I do think the very best companies in the world are public companies. Mhm. Um not everyone but generally and one of the reasons is um in many industries scale and scope matter. Small is not beautiful.

Um a and um you you you um um an example of this is uh um video conferencing where Zoom new innovator brought out video conferencing and Microsoft launched teams and just distributed a free integrated in in in in their bundled office product. Now people say Zoom was a better product, but Microsoft won because they had this bundling strategy and they had scope. They had, you know, advantages of scope and and Yeah. and and and and uh the ability, you know, customer relationships and and and so I think people underestimate sometimes these powers of big companies of incumbency to uh crush a competitor and and uh so I um um the but the a public market investor doesn't have no influence. Okay? if they're willing, they can uh they can influence and sometimes um stopping stupid things.

a and an example of saffron you know we had this great company reported eight times earnings it was compounding at 20% and then one day they came out and tried to make an incredibly stupid acquisition of a company called Zodiac a wild over valuation using shares which were half their intrinsic value. So it was doubly bad. Um and we fought the deal and in the end they cut the price in half and then paid only in cash and the share price doubled. You know we got sued by the seller. I was sued personally for hund00 million euros and the uh my CFO came to me very stressed one night saying it's all right for you. You can afford it but they're going to bankrupt me and um because the seller lost a billion euros and uh and but few investors will act like that. Mhm. Yeah. Most just accept it. But in the end they they they they cut the price and blamed us which was fine. and uh and all's well that ends well. They they they never did silly things again.

Um but but then you have to jump in. You you have to have a big enough ownership stake to to actually have that influence, don't you? In some form or at least a real voice that they uh that they will listen to. And the challenge in the public markets, if I may challenge that, is that often the companies become run by the the management, right? because they're ultimately ones then with with no active shareholders they effectively point the board and you you have a bit of a governance that's a big risk other side of the coin it's a big risk and in general well I would maybe the journal is there are many companies with bad governance that become badly run and I'm you know I'm not a believer in being an activist in a bad industry or bad company that doesn't make any sense but um and

So, but there is a I don't actually think the shareholding necessarily is everything can matter. We we went recently on the board of a company called Snell next cell phone towers and we we had 10% and so it mattered because there were four comp four shareholders with 10% each and so it was very concentrated but um I think the power of the argument can win you know shareholders are not stupid you know bank is not going to be an activist themselves but if an activist makes a good case they'll support them yeah they'll they'll support them whatever stake the activist has 1% 2% it doesn't matter.

So I I And can we go back can we go back to the this this statement that you had that the best companies are public. Um I don't really appreciate that one. Uh so maybe I give some examples. You know we but I do agree with you that having companies that are uh you know strong large winning beating the competition whatever. Uh one is a very interesting that we own which is the world's largest private education company. It's a $15 billion company. It's uh but it's only got 5% market share around the world, growing organically through acquisitions, super purpose-driven, doing very good for society. Um and uh the competitors are, you know, moms and pops all around the world that don't have the resources to invest in AI and the next generation of education and stuff like that. Um that is a brilliant uh company. We've actually had it public twice, but the public market didn't appreciate it. So, we've taken it private twice and now we're just going to keep it private hopefully for as long as we can and just build and build and build. So I think the world is also changing because private equity has gotten so large now um and t and we can move companies into longerterm ownership structures. So we can actually I think we're going to see more and more of the best companies in the world either stay private or go private and and grow. Um and that's a big difference and that's one of the things we're seeing in the market while you heard you know number of public companies is shrinking a lot over time.

And you alluded to the importance of control. You tried an approach, a private equity approach in the listed market with the EQT listed. I hope we didn't have time for that one.

Some reflections on lessons learned. Yeah, we did. We tried to start a mini version of what you do and we failed miserably actually. It um we you know after we shut the fund down last year, we we delivered back like 90% of the capital that was invested or something a little bit worse than that. And uh luckily it was very small and uh when we realized we weren't good at it, we actually did shut it down and uh focus on what we're good at which is private markets. Um I think we tried to apply the models that you've heard me think about here and talk about here uh in a public setting where we didn't have we didn't have the toolbox. We didn't have the understanding of how to drive influence. We thought we would have more impact being who we are and uh it didn't work. So, it's really about it's a it's a lot a lot of learnings in there. Back to really sticking to your guns and doing what you do well and more of that.

There's like everything there's pros and cons, arguments for and against, but in private equity, you you you pay a price for control. You pay a premium. Yeah. Can be big. Mhm.

So, so you know every don't get me wrong control has a high value has a value let's say it has a value but is it worth 40%. Yeah. Or whatever premium you have to pay in a competitive auction. You know in public markets there's an offer every day. Yep. You can take it or leave it. and and and so it's um um I think the the uh so I just think that that point is relevant entry price matters and yeah do you think do you think liquidity is overvalued in the markets

and yeah do you think do you think liquidity is overvalued in the markets

well the thing is why why do people need liquidity as much as they think they do all the time you can be wrong that's something um I learned the yellow pages example was Yeah. And if you're and um the if if you're wrong in private, there's no way out. Yeah. In a short term. And um if you're wrong in a public, you have a chance to get out.

Yeah. You have a you have a a chance, but you don't really have a chance to repair and improve what you do in private.

Right. we can we can huddle down, change the management, change the board, divest underperforming operations. So, it's a it's a it's just a completely different mindset to to a point.

Yeah. There there's um we were investors in cable. Yeah. In in the US and yeah, we own a lot of cable charter and uh communications and uh before that Time Warner Cabled and and it it was a great in investment for uh eight years. We made I know five billion a P&L and I know five times our money. But then the industry started to deteriorate. It became saturated and more competitive and people started overbuilding private equity. Yep. We bought we bought lots of those companies. So it started over one of our best sectors actually and yeah I sold. Yeah because it it changed. We were buying. Yeah. Yeah.

Unfortunately we are in the end of the session already. I would love to continue for much longer. Chris, you shared many of your secrets. You shared more in a podcast that you recorded with Nikolai which will be released on the 14th of May. So I encourage everyone to listen to that one. We'll take a break now. So please be back in this room at 15:25. But first and most importantly, a big big thanks to both of you for sharing your insights and to meet you. It was fun.

It was fun.