EQT and BPEA tie-up a ‘win-win’ for European and Asian dealmaking, says CEO Sinding

‘As we have seen with many other professional services and asset management industries, we think that over time a handful of global leaders will emerge’ in the private equity sector, said Sinding.

EQT completed its mammoth merger with Baring Private Equity Asia to create BPEA EQT earlier in October, with BPEA CEO Jean Eric Salata staying at the helm of the combined Asian private capital business.

The deal had a total consideration of €6.8 billion when the firms announced the deal in March, comprising 191.2 million new ordinary EQT shares – corresponding to a dilution of approximately 16 percent – and €1.5 billion in cash. The cash component was €1.6 billion at completion, with the change due to FX moves.

Christian Sinding, EQT CEO, spoke to PE Hub Europe about his plans for BPEA EQT, how the merger will affect the firm’s business in Europe and whether economic and geopolitical events since the deal’s announcement have changed the outlook for the firm and private equity generally.

While the deal increases EQT’s footprint in Asia, will it also affect EQT’s European business? Will some of BPEA’s clients be looking for European opportunities, boosting your dry powder for European opportunities?

The move significantly expands both our LP bases, so it’s a win-win. We’re looking forward to introducing our clients that currently have no existing relationship with BPEA to Jean and his team – particularly in Europe, the Americas, and the Middle East – and vice versa.

Do you plan any further mergers with other private equity firms?

We prefer not to comment or speculate on future strategy or plans, but like any other major firm, it is something we are constantly evaluating.

Do you believe there will be more consolidation in the private equity industry generally?

As we have seen with many other professional services and asset management industries, we think that over time a handful of global leaders will emerge but then there will also be a number of specialists.

It’s our ambition to remain and be one of the long-term global leaders in the industry and look forward to what this combination with BPEA means for our business and the industry, more broadly.

When you spoke to our affiliate site PE Hub in March, you spoke of the exciting growth in Asia. Have any of the headlines around China and Taiwan, or the struggling global economy more generally, affected your optimism?

We remain just as optimistic. Asia is one of the world’s most important markets. The region has strong long-term prospects driven by demographic and macroeconomic tailwinds – for example the population is both young and growing – and its scale and growth significantly exceed developed markets. All this makes it attractive to private capital investors for the long-term, even if the world is entering a challenging period economically.

It is also worth noting that the economic downturn and inflation impact in Asia is significantly lower than what we are seeing in Europe and in the US. Expanding further into Asia creates a truly global and diversified firm, which is helpful during downturns such as these.

In March, you cited TMT, healthcare, services and industrial tech as the four key sectors between EQT and BPEA. Will they remain your focus, or has the situation changed since March?

Yes, they will. We like to invest in sectors that benefit from long-term, secular trends, and events since March haven’t changed the long-term attractiveness of these sectors. Do we tailor and tweak our approach to reflect current events? Of course. But the overall focus remains the same. BPEA shares this approach.

How have conditions in the private equity market changed between the deal announcement in March and competition? Did any of these changes affect any aspects of the deal?

No. There were no changes to deal terms between announcement and close.

What made BPEA such a good fit for EQT, aside from the opportunities it opened in Asian markets?

As you say, the opportunities in Asia are a big reason for the combination, as we have long wanted to expand our presence in the region. Succeeding in Asia requires local relationships and experience with global capabilities and expertise. EQT now has teams on the ground in eight cities, a thematic investment strategy underpinned by global sector teams, and an active ownership approach driven by deep global networks of industrial advisers and digital capabilities – we believe we are well positioned for success.

But having a global presence – we now have offices in countries representing around 80 percent of global GDP – will benefit us all. We can leverage insights on a global scale, execute on a broader range of investment opportunities, assess risks and opportunities more effectively, and continue to attract the best talent.