EQT eyes Asia’s growing private wealth market with €6.8bn Baring PE acquisition

A host of private markets participants have flocked to Asia-Pacific in recent years as the size and depth of its private wealth community soars.

EQT, Europe’s second-biggest private equity firm according to the PEI 300, hopes to tap into Asia’s burgeoning private wealth opportunity with its €6.8 billion acquisition of Baring Private Equity Asia.

The transaction will see the Hong Kong-headquartered buyout and real estate firm rebranded to BPEA EQT Asia, according to a Wednesday statement. BPEA chief and founding partner Jean Salata will continue to lead the business as head of BPEA EQT Asia, reporting to EQT chief Christian Sinding.

EQT will own 100 percent of the BPEA management company, general partner entities and the right to carried interest in selected existing funds. The deal, expected to close in the fourth quarter of this year, comprises €5.3 billion of new EQT shares and a €1.5 billion cash consideration.

Stockholm-headquartered EQT is the latest in a host of private markets giants pushing deeper into Asia-Pacific, which is benefiting from increasing allocations among international investors and rising appetites for alternative assets among those closer to home. The private wealth channel represents a particularly lucrative prospect in Asia, with the region expected to supplant Europe as world’s second largest ultra-high-net-worth-individual hub by 2024.

“Private wealth investing into private equity in Asia has been, for now, relatively small,” Sinding said on a Wednesday analyst call. “But it’s a really great opportunity. With the combination of these two brands and these unique investment opportunities that we bring, we believe that that channel will grow significantly as we’re seeing now in the EQT funds as well.”

BPEA brings with it more than 300 existing LP clients, of which 115 are new to EQT, Sinding added. The firm’s existing flagship buyout programme will remain unchanged, and the newly combined entity will also launch EQT’s other private capital programmes, such as public value, venture capital, life sciences and future, in Asia over time.

“We’re going to be introducing adjacent strategies that are similar to what EQT is doing in Europe and the rest of the world in areas like growth capital, for example,” Salata said on the call.

EQT, which historically has invested in the region via a mid-market fund series, shelved plans to raise its own large-cap Asian private equity fund last year, chief operating officer Caspar Callerström said on its latest earnings call in January. “Given that it’s a super busy fundraising year, we’ve said that we will have to put that decision a bit on hold and raise the other products,” he told Private Equity International at the time.

“We’ve been focused on building EQT’s presence in Asia for quite some time,” Sinding noted on Wednesday’s call.

“We’ve hired teams, we’ve opened offices, we made a number of investments across the region, and over time, we’ve delivered quite good returns for our clients and investors. However, we’ve also been patient in trying to find what is the best solution for EQT long term and how do we really scale, because we have been quite small in Asia.”

Asia’s private equity market has experienced a stark flight to familiarity during the pandemic, as travel disruption, geopolitical tensions and a regulatory crackdown in China diminished western appetites for strategies with less geographic flexibility. The largest firms, BPEA included, have benefited on the fundraising trail as a result.

BPEA is deploying its Baring Asia Private Equity Fund VIII, which reportedly held a second close on $8.5 billion – the fund’s target – last year. The firm has 10 regional offices and has completed more than 100 investments since 1997, generating a 2.6x gross realised multiple of invested capital.

“Right now, these are uncertain times when it comes to macro and geopolitical aspects, but we’re quite confident that Asia will continue to pace global growth for many decades,” Sinding said.

BPEA’s real estate unit will be integrated into EQT Exeter, the global real estate business formed via an acquisition last year. EQT Infrastructure will continue to operate on a global basis as it had done prior to the BPEA transaction.

“The strategic fit between our businesses is perfect,” Salata said. “There’s very little overlap between what we do in Asia today versus what [EQT does] in the rest of the world.”

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