Stockholm-based private equity powerhouse EQT announced today an agreement to buy Baring Private Equity Asia for €6.8 billion ($7.5 billion).
The deal includes over 191 million in new ordinary EQT shares, valued at €5.3 billion plus €1.5 billion in cash.
The €73.4 billion EQT already offers 28 active funds within private capital and real assets but had yet to launch an Asia-focused offering. BPEA would add €17.7 billion to the overall AUM. EQT already has offices in the Asia-Pacific region.
Officials said that Asian private markets are expected to grow at almost twice the rate of global private markets and investors are set to materially increase their private markets allocations in the region. The newly combined businesses will be rebranded BPEA EQT Asia and will continue to be led by BPEA CEO Jean Eric Salata and BPEA’s senior management team.
Executives at EQT said that the business combination is expected to be immediately high single-digit accretive to EQT’s earnings per share.
“We are very excited to join forces with BPEA, which represents a step-change in our global reach with immediate Pan-Asian presence at scale,” said Christian Sinding, CEO and managing partner of EQT, in a statement. “Expanding our footprint in Asia is part of the strategic objectives we set out at the time of our IPO and BPEA represents a unique opportunity, as a well established and top-performing firm in the region, to enhance our global platform and position us to capitalize on the structural growth opportunity in Asian private markets.”
According to both firms, their corporate cultures are in alignment as each firm has grown through a ‘local-with-locals’ approach with decentralized decision making and a deep drive to learn and continuously improve. EQT touts its digitalization, sustainability and thematic toolboxes that will accelerate the value creation opportunity set in the region.
Sinding described the tie-up as being, “A perfect cultural and ideological fit with EQT, and a unique opportunity to establish EQT as a world-leading private markets platform with a scaled Asian platform and truly global reach.”
BPEA’s AUM has grown at a 25% CAGR from 2019 through 2021, as a number of notable institutional investors have allocated with the firm. These allocators include: Canada Pension Plan Investment Board; Rhode Island Employees’ Retirement System; Illinois Municipal Retirement Fund; and Teachers’ Retirement System of Texas.
According to EQT, BPEA has over 300 existing clients of which over 100 are new clients for EQT.
“Combining our strong position in Asia with EQT’s world-class capabilities in sectors, such as Healthcare and Technology, their proprietary digital transformation and data analytics resources, and their leadership in sustainability, will create a highly differentiated and extremely competitive private markets firm in Asia and globally,” said CEO and BPEA Founder Salata in a statement.
Following the deal, EQT will have more than €20 billion invested in Asia across private capital and real assets. Salata upon closing becomes head of BPEA EQT Asia and will oversee EQT’s Private Capital business in Asia, reporting directly to Sinding. Mr. Salata will also join EQT’s Executive Committee.
Post-transaction, there will be two divisions: BPEA EQT Asia, combining BPEA Private Equity and EQT APAC Private Equity teams, and EQT Private Capital Europe & North America. Over time BPEA EQT Asia is expected to provide the full suite of private capital strategies.
BPEA’s real estate business will be integrated into EQT Exeter, operating as one global platform. Last April, EQT bought Exeter Property Group, which includes Asia investments through the acquisition of Bear Logi in January 2022. The combination with BPEA Real Estate will enhance EQT Exeter’s local presence across the region.
Meanwhile, EQT Infrastructure will continue to operate on a global basis, including in Asia. It too is expected to benefit from BPEA’s strong local footprint in generating increased deal flow.