Sweden’s EQT has agreed to buy Baring Private Equity Asia for €6.8 billion ($7.5 billion) in a cash-and-stock deal that would give the Nordic fund manager its first substantial presence in Asia and allow it to bring the Hong Kong-based firm’s $19 billion in assets under management into its expanding portfolio.
Under the terms of the deal, EQT will acquire BPEA for 191.2 million newly issued EQT shares valued at €5.3 billion, plus €1.5 billion in cash, the Stockholm-based firm said Wednesday in a release. The transaction is expected to close in the fourth quarter of 2022.
EQT, which listed on NASDAQ Stockholm in 2019, has made a priority of expansion in Asia and sees joining forces with BPEA as a “step-change” towards immediate pan-Asia presence at scale.
“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 capitalise on the structural growth opportunity in Asian private markets,” said Christian Sinding, chief executive and managing partner of EQT.
Going into the deal with BPEA, EQT has €73.4 billion ($80.5 billion) in assets under management across 28 active funds within two business segments — private capital and real assets.
With the acquisition set to expand EQT’s portfolio by more than 23 percent, BPEA’s real estate business will be integrated into the EQT Exeter property division upon completion of the transaction.
EQT Exeter set up its first presence in Asia in mid-2021, when it established an office in Shanghai, then followed up in January this year with its acquisition of Japanese logistics developer Bear Logi to establish the firm in the continent’s second-largest economy.
EQT’s private capital business will split into two divisions post-merger: BPEA EQT Asia, comprising the combined firms’ private equity teams in Asia, and EQT Private Capital Europe & North America.
BPEA chief executive Jean Eric Salata will become head of BPEA EQT Asia and oversee EQT’s private capital business in the region, reporting directly to Sinding. Salata will also join EQT’s executive committee.
The Asia acquisition comes just over a year after EQT acquired Pennsylvania-based Exeter Property Group for $1.87 billion, with the Swedish firm saying at the time that the purchase gave it valuable capabilities in the North American real estate sector. Exeter had more than $10 billion in assets under management when the January 2021 deal was struck.
Salata, who led a management buyout of former Barings Bank unit BPEA in 2000, dubbed the EQT takeover a “game-changer” for both firms that would accelerate their ability to deliver superior returns for clients.
“The cultural fit between our two firms is remarkable and the strategic fit is very powerful,” he said. “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.”
BPEA’s recent moves include closing on more than $1.2 billion in capital for its China warehouse platform Forest Logistics last October, and the firm has been one of the most active players in India’s tech markets, including buying business process outsourcing firm InterGlobe Technologies from Apollo Global Management last month in a deal that valued the company at $800 million.
Last year, EQT Exeter sold a total of 141 US logistics assets to Singapore’s Mapletree in a pair of transactions totalling $3 billion.
EQT’s leap into Asia by acquiring a regional private equity player follows similar efforts by global giants like Canada’s Manulife, which last month announced plans to purchase a significant minority stake in Hong Kong-based Arch Capital Management, and British investment manager Schroders, which took a similar route in buying a majority stake in Hong Kong’s Pamfleet in 2020.