eQ Plc’s interim report Q1 2025 – eQ’s operating profit EUR 5.8 million

eQ Plc interim report
29 April 2025 at 8:00 AM

  
January to March 2025 in brief

• During the period under review, the Group’s net revenue totalled EUR 14.0 million (EUR 16.5 million from 1 Jan. to 31 Dec. 2024). The Group’s net fee and commission income was EUR 14.5 million (EUR 16.0 million).

• The Group’s operating profit fell by 34% to EUR 5.8 million (EUR 8.8 million).
• The Group’s profit was EUR 4.6 million (EUR 7.0 million).
• The consolidated earnings per share were EUR 0.11 (EUR 0.17).
• The net revenue of the Asset Management segment decreased by 5% to EUR 14.4 million (EUR 15.1 million) and the operating profit by 11% to EUR 7.9 million (EUR 8.9 million). The management fees of the Asset Management segment fell by 4% to EUR 13.5 million (EUR 14.0 million) and the performance fees fell by 19% to EUR 1.1 million (EUR 1.4 million). During the review period, the assets managed by eQ Asset Management grew to EUR 13.6 billion (EUR 13.4 billion on 31 Dec. 2024).
• The net revenue of the Corporate Finance segment was EUR 0.1 million (EUR 0.8 million) and the operating profit was EUR -0.8 million (EUR 0.1 million).
• The operating profit of the Investments segment was EUR -0.6 million (EUR 0.2 million). Operating profit was negatively impacted by the value changes of residential property funds.
• The net cash flow from the Group’s own private equity and real estate fund investment operations was EUR -0.8 million (EUR 0.1 million).

Acting CEO Janne Larma

Global capital markets have been in turmoil in the early part of the year. In the first two months of the year, US stock markets remained at year-end levels, while stock prices in Europe rose by around 15%. In March, share prices fell in the US and remained flat in Europe. After the review period in April, share prices fell sharply in both Europe and the US following President Trump’s announcement of tariffs. The stock market slump eased briefly after President Trump announced a 90-day tariff freeze for several countries, excluding China.

The tariffs were published only after the end of the review period, so they had no impact on the market development during the review period. The tariff war and geopolitical challenges have a significant impact on capital markets and uncertainty is currently very high. Uncertainty is always a negative factor for investors and this tends to lead to less risk-taking and fewer new positions. The customs war and the associated uncertainty are having a negative impact on economic development worldwide, inc. Europe. Similarly, interest rates have fallen significantly, especially in Europe, with the ECB cutting its deposit rate to 2.25% in April. This has a positive impact on financing costs and yield requirements, which in turn supports both the real estate market and equity investments.

eQ’s operating profit EUR 5.8 million

The net revenue of the Group during the period under review was EUR 14.0 million and the operating profit was EUR 5.8 million. Net revenue fell by 15 per cent and operating profit by 34 per cent from the previous year. Both Advium and the Investments segment made a negative result, which had a significant impact on the decrease in profit.

eQ Asset Management’s operating profit EUR 7.9 million

During the period under review, the net revenue of the Asset Management segment fell by 5 per cent to EUR 14.4 million. The decrease in net revenue, EUR 0.8 million, is explained by real estate asset management’s lower management fees. Private Equity management fees increased from last year, and equity and fixed income fees remained at the previous year’s level. During the review period, eQ Asset Management’s operating profit fell by 11 per cent to EUR 7.9 million.

During the review period, we raised USD 143 million for our newest private equity fund, eQ PE XVII US. After the review period, in April we did another closing and the fund size rose to USD 168 million. We also signed new Private Equity programme fund agreements during the period. The challenging market situation is making fund raising difficult, but our strong and good track record allows us to fundraise this well. After the review period, we reorganised our residential funds. We established the eQ Residential III fund, to which we transferred two of our previous residential funds and raised EUR 37 million in subscriptions. We will continue fundraising for both the eQ PE XVII US and eQ Residential III funds.

For open-ended real estate funds, the market situation has not changed much since the beginning of the year. The fall in interest rates is certainly improving the operating conditions in the real estate market, but market activity is still low. Most of the postponed redemptions of the eQ Community Properties Fund from the end of last year will be paid by 30 April 2025. eQ Commercial Properties Fund does not yet have the liquidity to pay the redemptions at the moment.

Our aim is to serve our clients as well as possible, both in terms of returns and service. With this in mind, eQ Asset Management has reorganised itself at the beginning of the year. This has also included some recruitments and appointments to key positions. I strongly believe that our new organisation will enable better service and growth, as well as a more efficient and modern way of working.

Advium suffered from weak market situation

The number of mergers and acquisitions and real estate transactions in Finland was very low at the beginning of 2025. Advium did not complete any assignments in the review period. During the period under review, Advium’s net revenue totalled EUR 0.1 million (EUR 0.8 million). Operating profit was EUR -0.8 million (EUR 0.1 million).

Given the market situation, Advium’s order book is at a good level. However, the completion of transactions is largely dependent on the overall capital market situation and its development.

Investment’s profit fell

The operating profit of the Investments segment fell from last year and was EUR -0.6 million (EUR 0.2 million). The profit was negative due to value changes of the investments. Private equity funds rose in value in the first quarter of the year, but residential funds fell. The balance sheet value of equity and real estate fund investments at the end of the reporting period was EUR 17.2 million (EUR 17.0 million at 31 December 2024). During the review period, eQ Plc made an investment commitment of USD 1 million to the eQ PE XVII US and EUR 1 million to the Residential III funds. Net cash flow during the period was EUR -0.8 million (EUR 0.1 million).

Outlook (unchanged)

The difficult market situation in the Finnish real estate market continued in 2024. Our assessment is that the real estate market levelled off towards the end of the year and that yield requirements generally stopped rising in the final quarter of the year. However, market liquidity remained at a very low level. The real estate market in general remains challenging. In several Finnish open-ended real estate funds, redemptions have not been completed on time and investors have had to wait for their money. Funds for redemption payments are mainly raised by selling properties and, as the transaction market remains quiet, redemption payments have had to be postponed. Lower interest rates and economic growth are having a positive impact on the real estate market. The market expects interest rates in Europe to continue to fall and the economy to gradually start to recover. If these estimates materialise, we expect 2025 to be a better year for the real estate market than 2024. 

Due to the current situation, eQ’s real estate fund management fees are expected to decrease in 2025 compared to the previous year.

Sales of eQ’s Private Equity products has continued to be strong, and we believe that Finnish asset management clients will increase the Private Equity allocations in their portfolios in the coming years. We estimate that eQ’s Private Equity fees will increase in 2025 compared to last year. The exit market for private equity funds was quieter than expected in 2024. As a result, the timing of Private Equity performance fees accruing to eQ has moved forward. Performance fees are expected to increase starting from 2026, with a number of private equity products expected to move into the performance fee phase.

In traditional asset management, we believe we have a good market position. The development of fees is largely dependent on market development.

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eQ’s interim report 1 January to 31 March 2025 is enclosed to this release and it is also available on the company website at www.eQ.fi.

eQ Plc

Additional information:
Janne Larma, acting CEO, tel. +358 9 6817 8920
Antti Lyytikäinen, CFO, tel. +358 9 6817 8741

Distribution: Nasdaq Helsinki, www.eQ.fi, media

eQ is a Finnish group that concentrates on asset management and corporate finance business. eQ Asset Management offers a wide range of asset management services (including private equity funds and real estate asset management) for institutions and private individuals. The assets managed by the Group total approximately EUR 13.6 billion. Advium Corporate Finance, which is part of the Group, offers services related to mergers and acquisitions, real estate transactions and equity capital markets. The parent company eQ Plc’s shares are listed on Nasdaq Helsinki. More information about the Group is available on our website www.eQ.fi.

Attachment

• eQ Plc interim report Q1 2025