Business Breakdowns
· Sean Barrett
[00:00:00] S1: Yeah, we think a lot of their check sizes end up being in the flagship fund, end up being in that 500 million to one and a half billion euro range. On the very high end, their most recent fund was 22 billion euros in private equity. That's one of the bigger private equity funds in the world. And within that they also have the ability to tack on co-invest. So if they have a need for more capital, they can tap their partners and the partners can help with co-invest. It's also something that big LPs really like. They view that co-invest as an opportunity to bring down the blended fee rate and it's good partnership. On a side note, it's also a reason that we're comfortable that EQT can continue generating great returns at larger and larger fund sizes. Because if you look back over the last five or ten years, yes, their flagship fund has doubled in the last seven years, the fund size has doubled. But at the same time they use so much co-invest along the way that they've actually been investing more and more over time, bigger dollars over time and then they've done a really good job with returns. So the private equity business has generated a 21% net IRR historically for investors. EQTerians, they like to call themselves performance gatherers, not asset gatherers. But if you keep generating 21% net IRRs for your investors, they will happily give you more and more money. And that's why this business has grown so quickly.
· Matt Reustle
[00:00:00] S0: Yeah, one certainly leads to the other. That is the case. I interrupted as we progressed through some of the strategies so we can push on.
· Sean Barrett
[00:00:00] S1: Yes. So EQT Asia, this is a strategy that we're really excited about. EQT Asia manages about 25 billion of fee-paying AUM if you include the most recent fundraise in 2025. And EQT acquired this business in 2022. It was formerly the Baring Private Equity Asia business. So everyone refers to this business as BPEA, but it's a fantastic franchise that's been generating great returns for investors for almost 30 years. Almost half of EQT Asia's business is in India and they have effectively no China exposure. But the India market is really attractive. It's growing GDP 6 to 8% per annum. And EQT is buying tech and healthcare leaders in that market that can typically grow revenue 15 to 20%. The interesting thing about India, it's really underpenetrated from a private equity perspective. It's actually a very small private equity market. EQT, we think has a 10 or 20% market share of that private equity market in India. So they've established themselves as a leader. But you really need people on the ground. If I think back actually early in my career, 10 or 15 years ago, I was looking at a couple software businesses in India that I thought were quite interesting and attractive. And I actually called a friend who's been investing in operating businesses in India for at this point, 30 years and I said, hey, you know, here's some interesting businesses. What do you think I should do? He says, don't do it. He says, you're going to get your face ripped off. You can't invest in India sitting in California. You need people on the ground. You need to know the players, you need to know what's going on on the ground. And it was really good advice that he gave me. But it's even more impressive looking at what EQT has done. They've just created an unbelievable business. They've got a great team, I think a repeatable process to find great businesses there. So when you think about what EQT Asia is doing, think IVF businesses in India, underpenetrated market, big impact on society. Nice long-term grower. Or Nord Anglia, which is an education business they actually took private almost I think 17 years ago and they've owned off and on since then. But they've expanded that business into India and it's a great case study. I think they've actually grown revenue 10x in that business since they bought it. And more importantly, Nord Anglia has a 96% student retention rate.
· Sean Barrett, Matt Reustle
40% of its students go to top hundred universities globally after graduation. So it's had a great impact on society, but it's also made EQT investors a lot of money along the way. And I think that's what EQT really is known for. It's like great impact and great returns. [00:00:00] S0: Is the purchase of Baring's business, was that unique to that specific situation? Or is that something that they use as strategic tool to expand into new strategies?
· Sean Barrett
[00:00:00] S1: It is something that EQT has used as a tool, the M&A muscle. And frankly I'm always skeptical of M&A. Whether it's in the financial services industry or the tech industry. It comes with different risks for tech. The integration of the technology is always very difficult, more difficult than people think. And it creates a huge risk. It takes focus off from other things management can be doing. In financial services, it's also a huge risk. I mean it's a people business. You have to get the cultures right. Sometimes there's organ failure and it can be a huge problem. So I was actually skeptical, I'll admit it. When EQT bought BPEA, I thought, gosh, this is going to be tough. It's a big business, it's a different geography. I will give EQT credit. They did an unbelievable job not only sourcing this investment or sourcing this acquisition, but also integrating it. The leadership at EQT Asia is exceptional. They've actually held onto the shares that they got as part of that acquisition. And some of the leaders there are now the largest shareholders in EQT and the returns have been exceptional. So that's been a great one. EQT also bought what is now its real estate business. It was known as Exeter before that. I think this was a slightly easier integration, if you will, just because of the geographies. But EQT acquired the Exeter business in 2021 and they've roughly doubled Exeter's AUM since then. So while M&A is really tough in financial services, I think EQT has a thoughtful process around how they do it. They do it consistent with their values and they've done a pretty good job. Even though they don't have credit today, for example, I could see them leaning back into credit through an acquisition sometime in the future.
· Matt Reustle
[00:00:00] S0: Was a future question on my list. So we got that one checked off. Give us some description about the remaining buckets that we haven't talked about?