Swedish private equity player, EQT Group, has exited its investment in packing group, GPA Global, marking the third exit out of its Mid Market Asia III fund.
The firm, which often employs a value-add strategy, acquired a co-controlling stake in GPA in 2017 and sold the China and US-headquartered group to Ontario Teachers’ Pension Plan Board (OTPP) for an undisclosed amount, the parties announced last week. The two co-founders, Tom Wang and Adam Melton, retain their stake in and control of the company. EQT declined to share details of the new ownership.
During its five-year holding period, EQT led seven acquisitions for GPA that helped it expand to new end markets and grow from a regional champion to a global player in the packaging industry, EQT director, Eugene Lee, told FinanceAsia.
Hong Kong-based Lee, who was involved in the transaction, said the acquisitions enabled GPA to move its production bases nearer to customers – a strategic move that furthermore, helped it weather recent supply chain disruptions.
“This is also a very sustainable transformation journey, because it reduces the need for shipping and moves packaging production closer to where it needs to be,” he said.
Lee declined to disclose revenue figures, but the release explained that GPA’s earnings grew fivefold over the investment period.
Mid Market Asia III closed in 2018 at $800 million and has made 14 strategic investments so far, of which three have been fully or partially exited. Earlier this year, it invested in Shanghai-based pest control company, Guardian, rendering the fund fully deployed.
EQT invests under four broad themes, namely – technology, media, and telecom (TMT), services, healthcare and industrial technology. Lee believes this approach has been vital to its success, particularly as private markets in Asia mature and in light of the ongoing slowdown in 2022.
“There have not been a lot of landmark transactions or auctions this year, so it really rests on the manager's ability to identify these strategic targets, reach out to them, and find an investment angle. I think that’s something that we did pretty well, as we continue to have very strong deal flow.”
On exit strategies, Lee said that EQT does not limit itself to particular exit routes, but rather focusses on building high quality companies that will attract the right buyers. “We want to find a reputable partner that will continue to develop the company for the long term. The sale of GPA [to OTPP] is an example of this.”
EQT has also been ramping up its adoption of technology to source new acquisitions and investments. Its digital team has built an in-house AI tool, dubbed “Motherbrain”, that scours the internet for insights and data on companies.
The company is in the process of acquiring Hong-Kong based investor, Baring Private Equity Asia (BPEA), in a deal valued at $7.5 billion. The transaction is expected to finalise in the fourth quarter of this year.
BPEA closed its eighth fund earlier this month. At $11.2 billion, it is the firm’s largest fund to date and one of the largest private equity funds raised by an Asia-based private equity firm, the business claims.
The largest APAC-focussed private equity fund to date is US-based KKR’s $15 billion Asian Fund IV, which closed in 2021.
Other private equity players eyeing the region include US-based TPG, which last week reportedly closed a new $3 billion Asia-focussed fund.