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EQT’s investment in Hollywood talent agency UTA is part of the private equity firm’s effort to generate growth from the nuts and bolts of the entertainment industry, Kasper Knokgaard, one of the firm’s partners, tells Axios.
Why it matters: Rather than invest in individual content companies, EQT is building a portfolio of assets that provide Hollywood’s infrastructure.
- Along with its sizable minority stake in UTA, EQT acquired Cast & Crew in 2019, a software company that provides payroll and accounting services to Hollywood studios.
- “Cast & Crew plays in a different part of the ecosystem than UTA, but fundamentally, what they’re doing is somewhat the same. It’s kind of the shovels of the industry,” Knokgaard says.
- Bloomberg reported in March that EQT was looking to sell Cast & Crew — which has been sold three times already since 2013 — for as much as $8 billion.
The big picture: “I mean, we do like the market,” Knokgaard says, when asked if they’re looking to grow the entertainment part of the portfolio.
- “It’s also one of the more recession-resistant markets you can invest in, which is not a bad thing these days,” he says. “Entertainment is one of the last things people cut. They’ve stopped traveling, don’t dine as expensive anymore, but they spend more time at home. So cutting your Netflix subscription is the last thing that you do.”
Zoom out: While Knokgaard would not comment on the size of EQT’s stake, Puck’s Matt Belloni reported last week it was worth nearly $800 million and could value UTA for as much as $2.5 billion.
- EQT acquired the full minority stake held by Bahrain-based Investcorp, which first invested in UTA in 2018. EQT is also buying part of the company’s stakes held by Canadian pension fund investor PSP and other shareholders.
- EQT’s investment comes on the heels of CAA’s blockbuster acquisition of ICM, which effectively created a Big Three in the talent agency world alongside Endeavor. Knokgaard only sees the big getting bigger.
- “There’s the Big Three and the rest, and that gap is getting bigger because you need a certain size to be able to service the talents in the most effective way. Scale just matters, so those three will continue to grow and take market share,” Knokgaard says.
