Business Breakdowns
· 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?
· Sean Barrett
[00:00:00] S1: Yes. So moving on to the infrastructure business. Of EQT's 140 billion euros of fee-paying AUM, this business is about 40 billion euros and it's growing really quickly, so I'm glad we're touching on it. Consistent with EQT's thematic strategy, this business isn't buying toll roads, they're buying assets in big thematic growth areas. So they specialize in stuff like digital infrastructure and energy transition markets. Both of these are massive growth opportunities, but they require a lot of deep sector expertise. And EQT has been investing in both for a really long time. By chance, both of these sectors have really exploded with AI, which requires a lot of digital infrastructure or data centers, but it also requires a lot of energy to power those data centers. So EQT is in a really good spot now with what the world probably looks like in the next 10 years, and the numbers are just totally astronomical. But both of these sectors will require many trillions of dollars of investment in the next couple decades, and the capital just isn't there. Whenever you have a large supply-demand imbalance like this, it generally results in really great returns. And EQT we think, is probably the best positioned out there to capitalize on AI trends. Briefly digging into the business of EQT infrastructure just for a second. It's the same size flagship fund as the private equity. So they have a 22 billion euro flagship fund in infrastructure that's up from the last vintage at 16 billion euros. And historically they've generated about a 2.5x gross MOIC on their infrastructure business. So we're really excited about this business. Not only do we think EQT will continue generating great returns in infrastructure for their investors, we think that'll result in a lot of growth in the flagship fund and then they're also launching sleeve strategies outside of that that will supplement growth.
· Matt Reustle
[00:00:00] S0: Yeah, it's certainly very thematic and of the moment. Speaks for itself. What is the final bucket of the four?