Translation: Original published in Finnish on 11/29/2025 at 8:40 pm EET.

eQ's recent years have been difficult, and it has suffered badly from the challenges of Real Estate funds. However, the earnings bottom is likely to be at hand, and we expect a significant earnings improvement starting next year. However, in the short term, uncertainty is clearly elevated, and relative to this, the valuation level remains challenging. We reiterate our EUR 11 target price and Reduce recommendation and will await an improvement in the risk/reward ratio.

Finnish institutional asset manager

eQ is a Finnish full-service institutional asset manager, and its product offering is spearheaded by real estate and private equity (PE) funds. Its AUM was 13.7 BEUR in Q3’25, and it is one of the leading institutional asset managers in Finland. The Group also includes the investment bank Advium, as well as the Group's own balance sheet investments, but their significance to eQ's value is marginal.

The current eQ was formed in 2011 when Amanda Capital, eQ Asset Management and Advium merged. The company made strategically sound choices and was a pioneer in alternative investments in Finland. High-quality products, strong sales, and market tailwinds led to a rapid average revenue growth of ~17% between 2011-2023. Due to a tight focus, profitability was also exceptionally strong. The years 2023-2025 have been difficult for eQ due to problems with real estate funds. Due to its very narrow product offering, it has not been able to compensate for the resulting gap, and both revenue and earnings have declined significantly.

A new strategy will be published in February in connection with Q4

The purpose of the new strategy is naturally to get the company back on the path of sustainable earnings growth. We believe it is clear that the company will expand both its product offering and its customer base in its new strategy. Growth in the customer base is also sought from outside Finland, and the product offering will remain focused on alternative products.

The earnings trend is finally turning

We expect eQ's earnings to turn to strong growth during 2026, as the long-awaited performance fees from PE funds finally begin to materialize as cash flow. For new sales, 2026 is an important year, as PE funds should return to strong growth due to an improved market situation and an expanding product offering. For real estate funds, we expect the situation to stabilize during 2026, but the payment of outstanding redemptions will continue to weigh on revenue. With the new sales potential we have outlined for eQ (~600 MEUR/year), the annual earnings growth potential based on management fees would be approximately 10-15% after 2026. This level requires a boost from real estate funds and excellent success in PE fund sales. Overall, we expect the company to achieve 13% annual earnings growth between 2025 and 2029. The dividend policy will remain generous, and the company will continue to distribute its entire earnings as dividends.

Risk/reward ratio still not sufficient

At the realized earnings, the share is still expensive (P/E 21x), but strong earnings growth pushes the multiples for the coming years to neutral (P/E 15-16x). The share is also priced at a significant premium relative to its peer group. Our DCF model is also at the current share price level. eQ's share currently involves a lot of short-term uncertainty due to 1) the scale of real estate fund redemptions, 2) the sales trajectory of PE funds, 3) PE performance fees, and 4) the success of the new strategy. Although these factors will mostly fade over the next 12 months, they reduce the attractiveness of the stock in the short term. We believe the risk/reward ratio is still inadequate, and we will continue to monitor developments from the sidelines.