Swedish private equity (PE) player has completed its acquisition of Hong Kong-based Baring Private Equity Asia (BPEA), a deal that was first announced in March.
BPEA founding partner, Jean Eric Salata, discussed with FinanceAsia the expertise that the merger brings together.
“It’s a very strategic combination. Ultimately, it's about how can we make sure that we're going to continue to deliver top returns for our investors.”
Elaborating on how to achieve this, he shared, “You need to be global; you need to have scale; you need to be able to draw insights on what's happening in sectors globally; and you need to scale resources to really create value into the companies that you acquire, not just be a passive investor.”
“All of the things that we're doing today are going to be enhanced by a factor of 10 or so, if you look at the way that we're now going to be able to scale up and become part of a global business,” he added.
With the merger, Salata becomes chairman of EQT Asia; head of the combined private equity entity, BPEA EQT; and a member of EQT’s executive committee.
The transaction consisted of 191.2 million new EQT ordinary shares (resulting in a 16% dilution), which the release in March valued at €5.3 billion ($5.21 billion), and involved €1.6 billion in cash. Based on EQT's share price as of October 18, the value of the new shares now equates to €3.8 billion.
Net proceeds from a €1.5 billion sustainability-linked bond issued by EQT in April, helped fund merger expenses.
Last month, BPEA closed its eighth Asia-focussed PE fund at the its $11.2 billion hard cap, giving it the accolade of constituting one of the largest private equity funds ever to have been raised in Asia. The fund has made three investments so far, rendering it 15% deployed, Salata said.
Having acquired 100% of BPEA, EQT has the right to carried interest in selected existing funds, including 25% in BPEA Fund VI, and 35% in BPEA Fund VII. It will also invest in and be entitled to 35% of the carried interest in future BPEA EQT funds, including BPEA Fund VIII.
As of 30 September, BPEA had €22.1 billion in fee-generating assets under management.
Expanding in Asia was a “strategic ambition” for EQT, which, prior to the acquisition, had set up APAC offices in Hong Kong, Seoul, Shanghai, Singapore, Sydney and Tokyo. The merger enables it to add Beijing and Mumbai to its footprint, Salata confirmed.
By absorbing BPEA’s 225 employees, EQT’s headcount in the region has grown to over 330, a spokesperson confirmed with FA. This includes the team at EQT’s real estate division, EQT Exeter, which following the transaction will include BPEA Real Estate and will expand EQT’s investments in logistics, office, multi-family and life sciences. EQT Infrastructure will continue to operate globally, while benefiting from BPEA’s pan-regional networks.
“Asia is home to more than half of the world’s population and is predicted to generate over 40% of global GDP within ten years – as a result, it’s expected that the growth of the Asian private market will accelerate at nearly double the pace of global markets through 2025,” said Christian Sinding, CEO and Managing Partner of EQT, in the release.
