EQT AB announced on Wednesday that it has agreed to pay 6.8 billion euros ($7.5 billion) to acquire Baring Private Equity Asia (BPEA) to take advantage of the region’s rapidly growing private markets and increase its global presence.
Shares rose 11.6% on Wednesday after the private equity firm said the deal would immediately add high single digits to its earnings per share.
EQT said it expects Asian private markets to grow at nearly twice the rate of global private markets and that investors “stand ready to significantly increase their allocations to private markets in the region.”
Expanding its presence in Asia has been a strategic priority for EQT, the company said.
EQT plans to rebrand the combined Asian private equity business as BPEA EQT Asia, which will be led by BPEA founder and CEO Jean Eric Salata and the BPEA management team. Salata will also join EQT’s executive committee.
The purchase price included 191.2 million new EQT ordinary shares, valued at €5.3 billion and €1.5 billion in cash.
In total, Baring Private Equity Asia currently manages approximately €17.7 billion ($19.5 billion) and currently leverages capital from Private Equity Fund VIII, which invests in mid- and large-cap companies in Asia. Founded in 1997 and based in Hong Kong, BPEA operates from 10 regional offices and also employs real estate and growth equity teams.
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EQT CEO and Managing Partner Christian Sinding said the acquisition will provide the company with “a step change in our global reach with an immediate pan-Asian presence at scale”.
The addition of BPEA represents a “perfect cultural and ideological fit with EQT,” Sinding said.
Once the transaction closes as planned in the fourth quarter, EQT Private Capital will consist of two main units, BPEA EQT Asia and EQT Private Capital Europe & North America.
EQT will combine the property investment unit of BPEA with EQT Exeter, which it acquired in April 2021. In January, EQT Exeter acquired Bear Logi.
EQT will operate in 25 countries representing 80% of the world’s gross domestic product after the conclusion of the agreement.
As part of the acquisition of BPEA for $7.5 billion, EQT agreed to pay $1.1 billion to BPEA’s minority shareholder, Affiliated Managers Group Inc. AMG,
AMG CEO Jay C. Horgen said his stake in BPEA “has resulted in a positive outcome for all stakeholders.”
AMG acquired its 15% stake in BPEA for $187.5 million in 2016.
AMG shares are down 20.8% in 2022, compared to a 10.6% decline in the S&P 500.
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