EQT billionaire takes on Wall Street titans with big Asia push

[HONG KONG] Billionaire investor Jean Eric Salata’s first foray into Asia was painful: Five write-offs in India and mounting losses worth hundreds of millions of US dollars. Times were so tough, he changed his computer password to “perseverance” as a daily reminder to keep going.

Fast forward two decades, Asia is now a key growth driver for Salata’s current firm, EQT, which is taking the private equity world by storm with sizeable cash outs and top-level returns. It’s aiming to triple Asia investments to as much as US$110 billion in five years, outpacing deployment in its home turf of Europe. Executives project another US$10 billion in exits from the region over the next year, sources familiar with the matter said.

Salata, 59, who was nominated global chairman of the Swedish buyout firm last month, said EQT is capitalising on global investors’ quiet shift from US political turbulence towards Europe and Asia. From its base in Stockholm, EQT is wagering it can break the decades-long grip of the world’s biggest alternative asset managers.

“Being European, being Nordic in its roots and heritage, we have a good position globally in this new world order where we can be a little bit more neutral in the way we view things,” said Salata, EQT’s second-largest shareholder after the billionaire Wallenberg family.

EQT may not be a household name but it’s grown to become the largest non-US private equity firm in the world, with US$310 billion in assets. Operating under the shadows of rivals such as KKR and Blackstone, its total fundraising over the past five years is just shy of KKR’s, according to Private Equity International.

The new Asia fund, BPEA IX, secured US$600 million in fresh commitments from two major US pension funds over the last six months, a source familiar said. That’s in addition to US$200 million from the New Jersey Pension Fund early this year. Repeat investors include the Teacher Retirement System of Texas and the Employees’ Retirement System of Rhode Island, the source said.

Under Salata and new chief executive officer Per Franzen, EQT is now embarking on its next chapter, aiming to raise 100 billion euros (S$151 billion) in the current fundraising cycle, while investing US$650 billion globally in the next half decade. The firm has returned 25 billion euros to investors in the past 12 months, of which Asia has accounted for a sizeable percentage.

The buyout fund is riding a shift towards non-US dollar assets, even while it targets infrastructure and real estate in the US, including data centres, student housing and medical offices, Franzen said.  

EQT’s pace of cash distributions has stood out amid a broader slowdown, as many private equity firms contend with weak payouts and prolonged fundraising challenges. It offloaded US$9.3 billion of Galderma Group shares with other investors this year, the biggest single-year cash out by a private equity firm, eclipsing the London Stock Exchange Group’s US$8.2 billion sale in 2023, according to sources involved in the sale.

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In Asia, the asset manager generated US$10.1 billion for investors from selling Nord Anglia Education, among Asia’s top exits, bringing total distributions from the Asia fund and its co-investors to US$16 billion in the past 12 months, Salata said.

Asia will take centre stage in EQT’s growth plans. Its merger with Baring Asia, founded by Salata in 1997, has opened a major gateway to the world’s fastest-growing markets. Regional deal flow has more than doubled, fuelled by Japan, Korea and Australia, while India has remained consistently active, Salata said. EQT’s pipeline of deals is about US$15 billion to US$20 billion of “live opportunities”, he said.

BPEA’s two most recent funds, the 2018 and 2022 vintages, have delivered strong results, posting net internal rates of returns of around 20 per cent, and achieved gross multiples on invested capital of 2.7 times and 1.3 times, respectively, according to US pension filings and company data. The newest Asia fund targets 25 per cent gross returns and a 2.5 times multiple, according to the New Jersey pension plan.

Breaking the grip of US giants in Asia won’t be easy. While it has completed US$3.3 billion of exits in Japan this year, that trails KKR at US$5.1 billion, including real estate divestment. In India, Blackstone has a two-decade head start and can write big checks quickly. EQT plans to increase its deal capacity in Japan severalfold to US$5 billion, Salata said.

Despite the solid returns and robust fundraising, investors have not rewarded EQT in public markets as much as rivals. Its shares in Stockholm have gained about 11 per cent annually over the past five years in US dollars, less than half the returns posted by KKR and Blackstone.

“We are in this business for generations,” Franzen said, citing the Wallenberg family’s roughly 17 per cent stake. “The mindset is not to maximise the share price in the next five to 10 years. It’s to win in the very long term.”

The promotion of Salata, a Chilean who will succeed co-founder Conni Jonsson, was part of the most significant leadership transition in years. Franzen, previously head of private capital for Europe and North America, replaced Christian Sinding in May.

Salata’s success in Asia did not come easily, forged on scars from hype-driven bets and fizzled Internet deals at Baring. His first push into India was a debacle: US$360 million invested, five write-offs, with just one deal breaking even. The fallout was brutal. Baring partner Kosmo Kalliarekos was interrogated on the eve of his wedding in Greece, smeared in the press, and barred from returning to India for more than a year, according to his account on the firm’s website.

By 2002, recognising the need for a reset, the entire team flew to Omaha, Nebraska to hear Warren Buffett and Charlie Munger reflect on discipline and value investing. They then holed up in a windowless Marriott hotel basement with only whiteboards. A dozen colleagues debated into the night, coining a mantra of “buying growth at a discount”. It marked a turning point away from spreading capital thinly across small, minority stakes.

India setbacks

Salata and his team ripped up the playbook by focusing on larger, profitable companies and full-control deals. The firm’s fortunes turned with its US$490 million third fund in 2005. BPEA made a US$50 million investment in Chinese miner Hidili Industry International Development, and parlayed that into US$604 million when it went public. By negotiating an early release in October 2007, just before the financial crisis, the firm locked in profits and shielded investors from the collapse that followed.

More recently, EQT’s winning Asia bets have been in healthcare, technology and education, sectors largely insulated from tariffs. Its domestically focused portfolio, from hospitals in India to schools in Hong Kong and Vietnam, further limits exposure to trade tensions.

By selling to EQT for US$6.7 billion in cash plus shares, BPEA gained instant institutional heft and worldwide dealmaking access. The deal may also have been among Salata’s best: He emerged with a 10 per cent stake worth about US$4.3 billion.

Salata counts himself lucky to have found the Nordic firm, which shares his belief that every market is unique, especially in Asia. A one-size-fits-all approach rarely succeeds.

“The cultural fit is a key reason why this deal has worked,” he said. “I have had discussions in the past with American firms, and it just wasn’t gelling for me.” BLOOMBERG