EQT buying Baring Private Equity Asia for $7.5 billion

When European private equity firm EQT went public in 2019, one of its top goals was to grow its small Asia footprint. On Wednesday it landed a size-15 boot.

Driving the news: EQT has agreed to buy Baring Private Equity Asia for around $7.5 billion in stock and cash.

Why it matters: EQT says this makes it the world's third-largest private manager focused on active ownership (i.e., excluding credit), behind Blackstone and KKR.

• The firm has been on an acquisition spree, having last year expanded its U.S. real estate investing business via the purchase of Exeter Property Group and its European life sciences investing business via the purchase of LSP.

Backstory: EQT CEO Christian Sinding tells me that discussions between the two firms began last fall, after Hong Kong-based BPEA began prepping for an IPO. The two sides first met for dinner at a restaurant in Italy, which stretched out for six hours.

• "We kept discussing discussing how much better it could be to be together rather than going it alone," says Sinding, who adds the deal wouldn't have been possible for EQT were it still privately held.

For EQT, this is both about sourcing new deals and new LPs.

• “The private equity market in Asia is growing twice as fast as it is in the rest of the world, but it’s underpenetrated in terms of large, scaled players," Sinding says.
• He also brushed aside concerns about possible geopolitical fallout were there to be a new development with China, such as official support for Russia's war or an invasion of Taiwan, saying BPEA has been careful not to concentrate its portfolio in any one country.

For BPEA, it's about partner liquidity and getting access to EQT's vast infrastructure, including its "Motherbrain" AI platform.

The bottom line: Expect more private equity consolidation, as firms seek to scale inorganically.