Sweden’s EQT AB expects to allocate as much as $3 billion in Japan from its $11 billion Asia private equity fund in coming years, betting that companies will take more steps to benefit shareholders.
(Bloomberg) — Sweden’s EQT AB expects to allocate as much as $3 billion in Japan from its $11 billion Asia private equity fund in coming years, betting that companies will take more steps to benefit shareholders.
The Stockholm-based alternative investment management firm considers Japan a “top priority” for its Asia business, said the firm’s chief executive officer, Christian Sinding, in an interview in Tokyo. EQT oversees a total 224 billion euros ($236 billion) in assets and was ranked by Private Equity International as the world’s third-biggest PE firm in terms of capital raised.
EQT has a few potential Japan private equity deals in the pipeline and is also likely to invest $1 billion in the nation’s real estate and infrastructure, said Jean Eric Salata, chairman of EQT Asia, in the same interview.
Japan has been pushing companies to improve governance standards and for listed firms to take steps to bolster their valuations such as buying back shares, as the world’s third-biggest economy competes to attract investments from abroad.
While private equity had long suffered a negative public image in Japan as “vultures” tearing apart companies for quick profits, the growing number of wealthy, long-term investors there seeking extra returns from alternative assets are helping improve its image.
“Now is a really interesting time to be here,” said Salata. “I’d say that there is an increasing amount of acceptance or understanding about just what private equity is and how it works.”
Shareholder activism is also on the rise in Japan, as seen in stock holders making a record number of proposals at companies’ annual general meetings this year to demand more returns and better governance. As long-term investors, EQT may be able to help by partnering with companies that are facing activist challenges, Salata said.
“We can be one of those white knights, one of those friendly parties that can step in,” he said.
EQT bought Hong Kong-based Baring Private Equity Asia Ltd. last year to gain a bigger foothold in Asia.
While India accounts for the largest investments in its funds, Japan is becoming increasingly important and it’s put money in companies such as audio equipment maker Pioneer Corp. and Bushu Pharmaceuticals Ltd.
The firm is cautious on China at the moment even though it believes the market will remain attractive over the medium to longer term.
“It’s a market that we believe over time we’ll continue to have interesting investment opportunities,” Sinding said. “It is also a market at the moment that is lacking in capital. But we probably will wait for things to become more clear over time before we commit more, in terms of new investments into the country.”
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.