Global private equity giant EQT boosts Asian bets on China's early-stage investment and domestic demand opportunities

The Zhitong Finance App learned that EQT Group (EQT), one of the world's largest private equity market investment institutions, is accelerating the expansion of its business in Asia, regards the region as an important growth engine, and believes that it contains the most attractive investment opportunities in private equity and infrastructure.

EQT CEO Per Franzén said in an interview: “Asia represents a huge growth opportunity for us... Some of the most attractive projects in our current investment pipeline are located in Asia.” According to the Swedish private equity giant, more and more private equity investors around the world are seeking to invest more money in the region through diversification of asset allocation.

At the beginning of April this year, EQT raised over $10 billion for its ninth Asian private equity fund, BPEA Private Equity Fund IX. The fund was launched in August 2024, with a target size of US$12.5 billion. The group also plans to invest approximately US$930 million in South Korean enterprise software vendor Douzone Bizon.

EQT's emphasis on the Asian market also reflects the strategic trends of other peer institutions. Competitor KKR recently revealed that half of its private equity capital to be returned to investors in 2025 will come from Asia. The New York-based American company even held its first board meeting in Tokyo.

Jean-Eric Salata, the long-term head of EQT's Asian business and to be nominated as global chairman next year, said that the key to the company's Asian strategy is deep localization to seize the “structural alpha opportunity” that exists in the region compared to the European and American markets — that is, the market efficiency gap.

“There are multiple inefficiencies in the market here. “To capture this alpha benefit, we must cultivate the local community and establish territorial teams,” said Salata. Currently, EQT has 350 employees in Asia.

In particular, he emphasized that the complexity of the Asian market and the high entry threshold make localized operations a key factor in acquiring projects, recruiting talents, and achieving investment exit.

China: A New Blue Ocean for Early Investments?

Although many global private equity investors are still wary of the Chinese market, EQT sees new opportunities.

“We think it's too early to implement a merger and acquisition strategy in China... the market is not yet fully mature,” Salata said. “But in the early-stage investment sector, we are seeing more exciting opportunities — this is bursting with tremendous innovation and growth momentum.”

According to a report released by Bain and Company this year, China's share of total private equity transactions in the Asia-Pacific region has plummeted from more than half of its share in 2020 to 27% in 2024.

He added that EQT's Asian strategy focuses on domestic demand-driven enterprises rather than cross-border mobile businesses, which enables its asset allocation in services, software, education, and financial services to better avoid the impact of geopolitical factors such as the tension between China and the US.

“We own one of the largest gastroenterology specialty medical groups in India. “This business is booming and is completely unaffected by complex factors such as changes in trade policies or tariffs,” Salata said, for example.

Notably, although some private equity managers blamed the high interest rate environment for exit difficulties, EQT stated that their investment decisions and results were largely unaffected by the currency cycle.

Franzén made it clear: “We never expect interest rate cuts. Continued investment in value creation capabilities is key.”

Salata is exemplified by the joint consortium's acquisition of international school operator Nord Anglia Education in March of this year. The deal was valued at US$14.5 billion. “People are willing to invest more in their children's education, especially in this region. Even in a complex environment with high interest rates, we have returned $10 billion in revenue to investors through this business. If we can hold high-quality assets in the right industries and create value for the business, we can create an all-weather investment strategy that is not affected by interest rate fluctuations.”