Private Equity Faces Funding Squeeze, Baring PE Founder Says
(Bloomberg) -- Private equity competition to raise money around the world is overwhelming investors, leaving some firms falling short of their funding goals, according to Baring Private Equity Asia Chief Executive Officer Jean Eric Salata.
Salata, whose company is being acquired by Sweden's EQT AB in one of the biggest deals of its kind, said a combination of public market drops, the war in Ukraine and too many private equity players trying to raise money simultaneously was leading to the funding squeeze.
“Limited partners are a little bit overwhelmed with the amount of funds out in the market raising capital,” Salata said in an interview with Bloomberg Television on Tuesday. “So there's a bit of a crowding-out effect where not everybody is able to raise all the capital they're trying to raise.”
His comments come as several private equity firms attempt to firm up their balance sheets and raise money via public listings or consolidations amid a rise in volatility. Asia's alternative investment market is expected to grow rapidly in the coming years.
“The overall trends in the industry will result in a handful of firms being the global leaders and we want to be one of those,” Salata said.
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Swedish investment firm EQT agreed in March to buy Baring PE Asia for 6.8 billion euros ($7.5 billion), after which the Hong Kong-based company will be renamed BPEA EQT Asia. Salata will remain CEO of the firm, which invests in mid to large-cap companies in the region and is mainly focused on private equity, real estate and growth assets, EQT said at the time.
BPEA managed 17.7 billion euros in assets before the deal and had been considering an initial public offering. The transaction is the biggest-ever takeover of a private equity firm by another in the sector, according to data compiled by Bloomberg.
©2022 Bloomberg L.P.
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