EQT AB is spending $7.4 billion to make this acquisition in Asia

In a major bet on Asian private markets, European acquisition behemoth EQT AB agreed to acquire rival private-equity company Baring Private Equity Asia for $7.5 billion in stock plus cash transaction.

Acquisition to offer EQT an additional €18 million in investments

The deal, which was confirmed on Wednesday, will offer EQT nearly €18 billion in additional investments for a combined amount of over €90 billion, bolstering administration fees and capital gain while instituting the Stockholm-based investment manager as a significant player in the Asian market to supplement its larger operations throughout Europe and the United States.

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Baring, headquartered in Hong Kong, invests in private equity and capital growth in a variety of sectors that include business and information services, medical, and technology, across most of Asia, with Hong Kong, China, and India leading the way. 

EQT is among Europe’s major private equity firms that have been expanding in recent years to fight with US rivals like  Apollo Global Management Inc., Blackstone Inc., and KKR & Co.

The Baring purchase is supported by Investor AB, the investment fund of Sweden’s famed Wallenberg family and largest shareholder of EQT.

Even though private equity firms specialize in acquiring and merging other firms, they seldom do so amongst themselves. This is partly due to the danger of creating excessive duplication in investment methods. However, mergers, on the other hand, aren’t unheard of.

EQT is looking to leverage opportunities in the Asian market

In recent times, investors have poured capital into private equities and other unconventional asset classes, drawn by the prospect of higher returns than those available in the public debt and equity markets. According to EQT, Asia is an especially attractive market since private investment assets under management have grown at a compound annual growth of 24 percent in the area since 2015, compared to 14 percent in North America and Europe combined.

The company’s CEO Christian Sinding stated in an analyst call:

“The scale players like EQT and [Baring] together are taking…an outsized share of the growth and an outsized share of the capital.