Swedish private equity firm is “particularly excited” about investment opportunities in India as a key market within Asia, according to the firm’s CEO and managing partner Christian Sinding.
During EQT’s Q3 2022 conference call on Tuesday, he said the Indian market offered excellent deal opportunities, driven by the country’s tech services and next-generation software companies.
EQT’s investments in Asia are now made through the BPEA EQT platform, following the completion of the merger of its Asia business with Hong Kong-based Baring Private Equity Asia (BPEA).
“BPEA has about 12% of its AUM and thematic investments in China versus now more than 20% in India,” Sinding said.
BPEA’s experience in choosing the right assets and geographies and being diversified across Asia, according to Sinding, makes it the right partner for EQT in the region.
Instead of raising its next Asia fund, EQT will now tap the $11.2-billion BPEA Fund VIII, one of the largest private equity funds raised in Asia, to invest in the region.
In India, BPEA has backed IT companies such as Coforge, NIIT Technologies Limited, Virtusa Corporation, CitiusTech and Hexaware, in addition to a number of businesses in the healthcare, construction and manufacturing sectors.
Prior to the business combination with BPEA, EQT invested in India-based renewable energy platform O2 Power.
Sinding said the firm will gradually build its mid-market growth focus in Asia as well as expand other strategies in the region.
“The teams are joining forces to source thematic opportunities across the region. We’re also working to strengthen the value creation toolbox globally, and particularly in Asia, through driving digitalisation and sustainability,” he added.
EQT reported an increase in assets under management to 92 billion euros in Q3 2022, up from 70 billion euros in Q3 2021. The merger of BPEA, which was completed in October, added another 22 billion euro to its AUM.
Together, the BPEA EQT platform has delivered a 2.6x gross MOIC (multiple on invested capital) since inception and a 17% net IRR by the end of last year.
Tapping private wealth
EQT is also looking at fund structures that will enable private wealth clients to invest in its funds, Sinding said during the conference call.
While it is still at an early stage, EQT is looking to launch products to meet demand across its private capital, infrastructure and real estate strategies.
“In many regions and Asia, in particular, institutions still have relatively low allocations to private markets. And the private wealth segment is expected to increase significantly from quite a little base globally. We do see a strong interest from a wider range of private wealth clients to invest with EQT,” Sinding said.
The global private markets has grown 3.1 times during the past decade and are expected to continue with a 2.4x growth to reach $20 trillion by 2030, which will be partly driven by private wealth, mass affluence and retail, according to the Swedish investment firm.
Meanwhile, Sinding also expects some headwinds in fundraising in the short term as the market is experiencing a denominator effect that weighs on allocations to private markets by a number of US pension funds.