UBS shuffles private equity sector, upgrades 2 names

Investing.com -- UBS has upgraded two private equity firms to Buy, CVC Capital Partners PLC (AS:CVC) and EQT AB (ST:EQTAB) Group, a move driven by multiple positive factors, including improving deal activity, carried interest potential, and easing macro uncertainty.

For CVC, alongside the upgrade, UBS raised its price target to €19.60 from €18.50, highlighting over 20% upside potential as shares trade at a discount to peers.

“We see CVC shares trading at an unjustified discount to peers, with >20% upside potential from re-rating,” analysts led by Haley Tam said.

The Luxembourg-based firm is expected to benefit from a pickup in private markets activity, particularly in Europe, and from potential upside in carried interest.

UBS estimates carried interest and performance-related earnings (PRE) of €249m for 2025, up from €182m in 2024 but still below the company’s €400m–€700m medium-term target.

The bank flagged potential upside if deal activity accelerates and fundraising activates earlier than expected.

“CVC reports Q2 25 on 14 August and H1 on 4 September. We expect CVC to update positively on the outlook for deal activity and fundraising,” analysts noted.

In addition to deal execution, UBS sees scalable growth across asset classes, including secondaries, credit, and infrastructure. CVC’s new evergreen funds have raised €1.3bn in less than a year.

“The speed of Evergreen fundraising at CVC is particularly impressive when compared to the slower start achieved by EQT and its Nexus fund range,” the report said.

UBS also upgraded EQT AB from Sell to Buy and raised the price target to SEK 360 from SEK 230, supported by higher forecasts and a lower discount rate.

The bank expects EQT to beat consensus expectations for carried interest in the first half (1H) and full year 2025 (FY25).

“EQT earnings are geared to private markets deal activity recovery,” analysts said.

They now forecast €495m in carried interest for 2025, notably higher than the €368m consensus and EQT’s own guidance of €250m for difficult years.

“We expect 1H results (due 17 July) to be a positive catalyst with EQT likely to beat consensus PRE expectations,” they continued, despite a weaker U.S. dollar acting as a modest headwind.

The analysts said early in the second quarter deal activity was dampened by tariff-related uncertainty and wider bid-offer spreads.

However, “as we approach the end of the 90-day tariff pause window, we see signs of renewed activity and note EQT has seen significant levels of activity in Q2,” they added. They expect this recovery in activity to support earnings momentum through the second half.

UBS sees significant scope for deal flow to support further upside, with EQT’s deal tracker showing “industry activity has picked up since May 2025.” EQT is forecast to deliver 63% PRE CAGR between 2024 and 2027.

At the new target, EQT would trade at 21.3x 2026 earnings, in line with historical multiples and peers.