The old PE that has been established for 25 years has sold for 6.8 billion euros.
text丨Tao Huidong
Source丨Touzhong.com
On March 16, 2022, EQT from Sweden announced that it will acquire Baring Asia for 6.8 billion euros, and the transaction is expected to be completed in the fourth quarter of 2022. EQT and Baring Asia are both top-notch private equity investment companies. EQT is the largest PE in Nordic and second largest in Europe, currently managing assets of more than 70 billion euros. Baring Asia currently has a management scale of 17.7 billion euros, making it one of the well-known PEs in Asia. That is to say, this merger will create a super PE with a management scale of nearly $100 billion.
The name of Baling Asia has a great influence in China's equity investment industry. It has invested in many companies familiar to Chinese people, including NetEase, Xu Fuji , barbecue chain restaurant Jinhans , Wall Street English , JD Health and many other companies. Xu Xin Before founding Today Capital , he worked in Baring Asia and was the "No. 1 employee" of Baring Asia in Hong Kong. Coincidentally, 2022 is exactly the 25th year of the establishment of Baring Asia, and this old PE ended its history of independent development.
EQT is a Stockholm exchange listed company. After the news was announced, EQT's stock price rose 12% on the same day, with a market value of more than US$35 billion.
Baling Asia has invested hundreds of projects in the past 25 years and the total return of 2.6 times
Baling Asia can be traced back to 1995. At that time, the Bahrain Bank , which had a history of more than 200 years, went bankrupt due to the trading violation of index futures , which shocked the world. Later, Dutch International Group acquired it for a symbolic price of 1 pound. In 1997, Dutch International Group continued the brand of Bahrain , established a Hong Kong subsidiary Baring Asia, and carried out equity investments in Asia. In 2000, Baring Asia was independent from Dutch International Group by the management acquisition of . After the establishment of
, Baling Asia quickly left its name in the history of Chinese venture capital, and was one of the most representative US dollar funds in China at that time. In 1999, Baring Asia's first phase fund invested $5 million in NetEase, which was probably the most ups and downs in history. Xu Xin, who led the investment in NetEase, later recalled that the investment price of Baring Asia was 5 yuan per share. In 2000, NetEase went public and its stock price rose to 30 yuan, but then the Internet bubble burst, falling to 60 yuan per share. During the trough period, Xu Xin resisted the pressure and never sold it until he withdrew with an eight-fold return in 2004.
To date, Baring Asia has completed more than 100 private equity investment projects, including more than 50 companies in mainland China alone. Baring Asia's investment scope is not only limited to IT and the Internet, but also covers various industries such as consumption, medical care, education, cultural media, and manufacturing. Representative cases include NetEase, Palm Wanwei, Yonghe King , Noah's Zhou, Pony Pentium, China Intelligent Transportation , Xu Fuji, Jinhans, COFCO Meat, Kangda Environmental Protection, JD Health, Hutchison Medicine, etc.
entered the Carlyle and other large-scale US PEs in the same period are more focused on large-scale mergers and acquisitions, while Baring Asia likes to invest in small and medium-sized enterprises for a long time, and the shareholding ratio can be high or low. Of course, this does not mean that Baring Asia focuses on growth equity investment. In 2011, Baring Asia established its real estate business department and in 2016, it established its credit department. Now Baring Asia is a large PE with diversified businesses.
Since its establishment, Baring Asia's grossMOIC (which has achieved a multiple of total investment income) has reached 2.6 times. In terms of management scale, Baring Asia has maintained rapid growth in recent years. Financial data released by EQT shows that between 2019 and 2021, Baring Asia's management scale grew at a compound annual growth rate of 25%, and the AUM (Fee-generating AUM), which can induce management fees, increased from 11.3 billion euros in 2019 to 17.7 billion euros.
Baling Asia's financial data
Moreover, Baling Asia will continue to raise a large amount of funds in 2022, and the AUM that can incur management fees is expected to reach 20 billion euros by the end of 2022, and will receive management fee income of 350 to 375 million euros.The transaction between
and EQT means that the history of Baring Asia's independent development since 2000 will end, but if you look closely at the transaction details, Baring Asia is not simply "selling itself", but a strong alliance.
The total consideration for EQT acquisition of Baring Asia is 6.8 billion euros, of which only 1.5 billion euros are paid in cash, and the remaining 5.3 billion euros are paid in the form of issuing shares. EQT will issue 190 million additional common shares to EQT shareholders. In other words, after the merger is completed, the original Baring Asia shareholder will hold approximately 14% of the shares of EQT. After the merger of
is completed, Baring Asia's private equity business will merge with EQT's Asia Pacific team to form a new "BPEAEQT Asia" department. Baring Asia CEO and founding partner Zhuang Jiacheng will serve as the head of the newly formed BPEAEQT Asia, managing EQT’s private equity business in Asia and directly report to EQT CEO and managing partner Christian Sinding. In addition, Zhuang Jiacheng will also join EQT's Global Executive Committee (Executive Committee).
At the same time, Baring Asia's real estate business will be merged with EQTExeter to operate globally on a single platform.
Swedish old PE fulfills its "entering into Asia's dream"
Buyer EQT is a Swedish old PE with a long history of hundreds of years like Bahrain Bank. EQT's parent company Yinruida is the largest industrial holding company in Nordic region, and it includes ABB, Ericsson and Electrolux and other Fortune 500 companies. Yinruida entered Asia very early. Before joining , Cai Chongxin, , his last job was the vice president of Yinruida Asia subsidiary before joining , Alibaba, in 1999.
EQT was founded in 1994 as the investment carrier of Yinruida. It is now a large private equity investment institution with an investment strategy covering all corporate development stages from the start-up stage to the mature stage. EQT currently manages assets of more than 70 billion euros, and has 28 funds in two business segments, private capital and real estate. It is the second largest PE in Europe in terms of scale. According to the financial report, EQT's revenue in 2021 reached 1.6 billion euros and its net profit was 900 million euros.
However, Asia is a shortcoming in EQT's global business layout. EQT's layout in Asia is not too late. In 2000, it established its first Asian fund, focusing on investment strategies for medium-sized enterprise acquisitions. In 2006, EQT raised US$545 million in Greater China Fund II. At that time, it was the largest fund of the same type.
The most famous project invested by the Great China Fund II is Laobaixing Pharmacy . In 2008, EQT invested up to 432 million yuan in this chain of pharmacies and obtained 48% of its equity, making it the largest shareholder. In 2015, Laobaixing Pharmacy successfully listed on Shanghai Stock Exchange . Between 2018 and 2019, EQT gradually completed its share reduction and exit, recovering about 5.5 billion yuan in total, achieving a return of more than 12 times.
However, overall EQT's investment scale in Asia is not large, and its current total scale is 200 billion euros, which is inconspicuous compared with its total AUM of more than 70 billion euros. If EQT wants to truly become a global private equity giant, it must strengthen its presence in Asia. In September 2019, EQT was successfully listed on the Stockholm Stock Exchange, and at that time it listed its entry into Asia as one of its main strategic goals after listing.
The merger of EQT and Baring Asia will be the most important move for EQT to enter Asia, and will immediately allow EQT to have more than 20 billion euros of investment management scale in Asia. In addition, Baring Asia has a broad and high-quality customer base in Asia. This collaboration will bring more than 300 customers to EQT, of which about 115 will be new customers of EQT.
EQT said in a press release that Asia is the growth engine driving the development of the global private equity market, with its market volume reaching approximately US$2.1 trillion in 2021, with an average annual compound growth rate of 24% since 2015, far exceeding the 14% growth rate of the total European and North American markets. The merger with Baring Asia is crucial for EQT to seize the growth opportunities in the Asian market. After the official announcement of the
trading, EQT's stock price rose by more than 12% on March 16, and its current market value has reached 333.1 billion Swedish kroner , approximately US$35 billion.
