Swedish private equity group EQT has completed the acquisition of Hong Kong-based Baring Private Equity Asia (BPEA) to create what the firm called a global leader in active ownership strategies.
The deal was said to be worth €6.8 billion ($6.7 billion) when it was announced in March, making it the biggest takeover of a private equity firm by another in the sector, per Bloomberg.
After acquiring 100% of the BPEA management company, EQT will have the right to the carried interest in select existing funds, including 25% in BPEA Fund VI and 35% in BPEA Fund VII). EQT will also invest in and be entitled to 35% of the carried interest in future BPEA EQT funds, starting with BPEA’s latest $11.2-billion eighth fund.
The transaction consideration consists of 191.2 million new EQT ordinary shares (corresponding to a dilution of approximately 16%) and 1.6 billion euro in cash, EQT said in a statement.
The cash consideration and transaction expenses related to the combination are funded by cash and the net proceeds from a 1.5 billion sustainability-linked bond issuance in April 2022, it added.
The Stockholm-headquartered investor sees Asia will outgrow global private markets, which will be a key contributor to its strong long-term returns.
“Asia is home to more than half of the world’s population and predicted to generate over 40% of the global GDP within 10 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.
The entity post-merger, BPEA EQT, consists of Asian teams based in Beijing, Hong Kong, Mumbai, Seoul, Shanghai, Singapore, Sydney, and Tokyo.
BPEA has gained 2.4x gross fully and partially realised MOIC since its inception and 22.1 billion in fee-generating assets under management, according to EQT.
BPEA CEO and founding partner Jean Eric Salata is now chairman of EQT Asia, head of BPEA EQT and member of EQT’s executive committee.
“To succeed in a diverse region like Asia requires strong local relationships as well as global sector and operational capabilities. The combined BPEA EQT platform gives us exactly this,” he said.
Meanwhile, EQT’s real estate division, EQT Exeter, will continue to operate as one global platform while tapping BPEA’s regional Asian real estate business. Mark Fogle, who was managing director and head of real estate for BPEA, now leads the EQT Exeter business in Asia.