On Wednesday, Swedish real assets and private equity investment manager EQT announced it has agreed to acquire Baring Private Equity Asia (BPEA), a private markets investment firm with EUR 17.7 billion (about $19.5 billion) in managed client assets. An announcement from EQT disclosed the sale price at EUR 6.8 billion (about $7.5 billion), of which EUR 5.3 billion (about $5.8 billion) is to be paid via the issuance of 191.2 million shares of EQT common stock, plus EUR 1.5 billion (about $1.6 billion) in cash.
The transaction gives EQT an immediate leg-up in the strategically critical Asia-Pacific region, home to more than a third of current global GDP and expected to contribute upwards of 40 percent of global GDP growth by 2030. According to figures from Euromonitor, cited by EQT, with 24 percent compound annualized growth since 2015 and reaching around $2.1 trillion in 2021, Asia is the growth engine underpinning global private markets (compared to 14 percent CAGR for Europe and North America combined). EQT expects this trend o continue as Asian private markets benefit from favorable long-term structural tailwinds.
Global private markets firms are increasingly taking share in what EQT describes as under-penetrated Asian private markets, but still only represent 34 percent of the total market. With this combination, EQT says it is ideally positioned to take market share in and capitalize on the Asian growth opportunity with its global reach and scaled active ownership platform in Asia.
Upon its acquisition of BPEA, which EQT says is expected to be “immediately high single digit accretive” to EQT’s own EPS, the firm will become a top 3-player in active ownership strategies globally.
BPEA is currently investing from its flagship Private Equity Fund VIII, which had its first close in September 2021. Since its inception in 1997, BPEA has built a platform with deep sector-based expertise and a value-driven active ownership approach, investing in mid to large-cap companies in Asia, mainly focused on Private Equity, but also Real Estate and more recently Growth. With 10 regional offices, BPEA combines local execution with a Pan-Asian reach (236 FTE+ as of 2021), mirroring EQT’s local-with-locals approach. BPEA has made 100+ Private Equity investments since its inception and has a track-record of generating strong returns for its clients, with 2.6x realized gross multiple on invested capital since inception.
“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 EQT CEO and Managing Partner Christian Sinding. “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. With its thematic sector-based approach, strong track-record in value creation, and most importantly, a learning culture and long-term partnership approach, we feel deeply aligned with BPEA. We are truly impressed by what Jean and the BPEA team have built over the past 25 years. 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”
“We are thrilled to embark on this journey with EQT and the possibilities that this combination creates,” said BPEA CEO and Founder Jean Eric Salata. “It is a game-changer for both our firms and will accelerate our ability to deliver superior returns for our clients. The cultural fit between our two firms is remarkable and the strategic fit is very powerful. 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. The future of Private Equity is about the ability to truly transform companies through active ownership strategies that deliver superior returns to clients throughout the cycle, regardless of the external environment. This combination positions us extraordinarily well to do exactly that at an industry leading-level.”
EQT Private Capital will have two divisions post-Transaction – BPEA EQT Asia, comprising the combined 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, from Ventures through Future, similar to what EQT Private Capital Europe & North America offers today.
BPEA’s Real Estate business will be integrated into EQT Exeter, operating as one global platform. Since the acquisition of the Exeter Property Group in April 2021, EQT Exeter has been growing globally, including into Asia through the acquisition of Japanese logistics investor Bear Logi in January 2022. The combination with BPEA Real Estate will significantly enhance EQT Exeter’s local presence across the region.
EQT Infrastructure will continue to operate on a global basis (including Asia) but is expected to benefit from BPEA’s strong local footprint to generate increased deal flow.
The transaction is expected to close in the fourth quarter of 2022.
