Baring Asia, EQT plan rollout of additional Asia strategies

BPEA recently closed its eighth flagship buyout fund on USD 11.2bn, stepping up from USD 6.5bn in the previous vintage. Speaking at the time, CEO Jean Eric Salata expressed an interest in raising a separate pool of capital for mid-size opportunities the firm targeted in the past that are now too small for the main fund. He envisaged a 70-30 split between buyouts and growth capital.

EQT is more advanced on the same journey, having closed its first growth fund, which is designed to fill the gap in between existing venture and large-cap buyout strategies. The firm also has a life sciences venture strategy and a long-dated impact fund.

“I had an email this morning from the head of EQT Life Sciences and he is excited at the prospect of looking at life sciences in Asia. We have nothing specific planned around that, but it is interesting to take some of the knowhow and technology in the group and apply it to Asia,” Salata said, speaking after the EQT-BPEA deal closed on October 18.

“We could have done that ourselves – we could have thought about expanding BPEA into different product areas. But that’s hard to do and high risk. By doing that in combination with proven expertise in other regions and combining it with our Asia knowhow, we are bringing together the two elements that will increase the probability of success.”

EQT has acquired 100% of BPEA’s management company and the general partner entities that control the firm’s funds for EUR 6.8bn (USD 7.5bn). It will also receive a portion of the carried interest from some current and all future funds. BPEA shareholders, including management, received EUR 5.3bn in EQT stock and EUR 1.5bn in cash. Salata is now the second-largest shareholder in EQT.

The deal was agreed in March, after the outbreak of war in Ukraine but before more recent macroeconomic pressures and public markets volatility. They did not deviate from the plan.

“Once the turbulence started, we shook hands and, ‘No matter what happens in the world, these two companies together will be more robust, more diversified, more knowledgeable and deliver better for our clients,” recalled Christian Sinding, CEO and managing partner of EQT. “We haven’t really looked back.”

The combined Asia private capital business will be led by Salata and his existing senior management team. It will have around 300 professionals across nine offices in the region. BPEA’s private equity and real estate businesses will be integrated with EQT’s operations in these areas, while EQT’s infrastructure platform will continue to operate on a global basis.

In terms of private equity, Salata noted that the approximately 20-strong EQT team in Asia has already joined forces through “a fairly easy integration.” He added that the BPEA and EQT teams are already working together across areas such as exit process management, sustainability, and value creation through digitalisation.

The EQT connection is also enabling BPEA to consider larger cross-border transactions where there is an Asia angle. “We are looking at something right now that’s in the USD 10bn enterprise value zip code. It would require a substantial equity cheque way beyond what we could do on our own. We are speaking to EQT private capital and to some of our larger LPs about it,” he said.

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• Topics
• GPs
• Buyout
• Europe
• Baring Private Equity Asia
• EQT Partners
• Asia
• M&A