WEBVTT - Riding Global Tailwinds with EQT's Jean Eric Salata 0:00:02.520 --> 0:00:07.000 Bloomberg Audio Studios, Podcasts, radio News. 0:00:07.400 --> 0:00:10.240 I'm Barry Ridhlts. You're listening to Masters in Business on 0:00:10.280 --> 0:00:15.000 Bloomberg Radio. My extra special guest today is Jean Eric Salata. 0:00:15.360 --> 0:00:20.640 He is chair of the QT Group, the largest alternative 0:00:20.640 --> 0:00:24.920 manager outside of the US. They manage over three hundred 0:00:24.960 --> 0:00:30.080 and sixteen billion dollars. Previously, he helped set up the 0:00:30.120 --> 0:00:33.720 Bearings Private Equity Asia Group and built it into one 0:00:33.760 --> 0:00:39.440 of Asia's premiere private equity platforms. With no further adoop, 0:00:50.479 --> 0:00:52.840 John Eric Salado, Welcome to Bloomberg. 0:00:52.960 --> 0:00:55.000 Thank you, Barry. It's great to be here. It's great 0:00:55.000 --> 0:00:55.440 to have you. 0:00:55.720 --> 0:00:58.680 I've been looking forward to this conversation for a while. 0:00:59.160 --> 0:01:03.640 Before we get to EQT, You've a really interesting background 0:01:03.720 --> 0:01:05.920 and I want to dive into that a little bit. 0:01:08.120 --> 0:01:10.920 You grow up in Chile, you go to the Wharton 0:01:11.000 --> 0:01:14.920 School at University of Penn to get a bachelor's in 0:01:15.000 --> 0:01:18.880 finance and economics. Was investing always the career plan? 0:01:20.160 --> 0:01:20.479 Well? 0:01:20.640 --> 0:01:24.319 I yes, investing was always the career plan. That's not 0:01:24.400 --> 0:01:26.960 how I ended up in Asia, but the idea and 0:01:27.080 --> 0:01:29.880 going to Wharton and becoming an investor was something I 0:01:29.959 --> 0:01:32.360 always wanted to do since I was a young boy. 0:01:32.880 --> 0:01:35.280 I remember reading a lot of biographies when I was 0:01:35.319 --> 0:01:38.240 a kid of business people and being very intrigued by that. 0:01:39.040 --> 0:01:41.840 I remember having my first paper delivery route when I 0:01:41.880 --> 0:01:44.120 was like ten or eleven years old and really enjoying 0:01:44.120 --> 0:01:47.319 the idea of making money, and then actually started investing 0:01:47.319 --> 0:01:49.320 that money as a young kid in the stock market 0:01:49.360 --> 0:01:52.040 as well, and kind of understanding how that worked. And 0:01:52.080 --> 0:01:55.200 then when I ended up at Wharton undergraduate and studying 0:01:55.200 --> 0:01:58.760 finance and management, I got very intrigued with global business 0:01:59.040 --> 0:02:03.000 outside the US. I come from an international background. 0:02:03.080 --> 0:02:03.720 My family. 0:02:03.760 --> 0:02:06.480 We grew up in South America. My grandparents actually came 0:02:06.480 --> 0:02:09.560 from Eastern Europe and were refugees that ended up in 0:02:09.560 --> 0:02:13.040 South America. Some generation a generation, we've been moving around 0:02:13.080 --> 0:02:15.079 quite a bit. I always felt like I had a 0:02:15.360 --> 0:02:18.440 quite a different perspective on life and the world than 0:02:18.440 --> 0:02:20.120 a lot of the people I was at school with, 0:02:20.160 --> 0:02:23.680 and so I was interested in pursuing that. And by 0:02:24.040 --> 0:02:26.080 as luck would have it or fate would have it, 0:02:26.480 --> 0:02:30.120 I ended up meeting my girlfriend at the time who's 0:02:30.120 --> 0:02:32.840 now my wife, who's from Hong Kong, and I ended 0:02:32.960 --> 0:02:34.000 up moving there. 0:02:34.040 --> 0:02:35.280 Right after I graduated. 0:02:35.639 --> 0:02:38.360 A year after I graduated from college and ended up 0:02:38.360 --> 0:02:40.840 really building my career in Asia as a result of that. 0:02:41.160 --> 0:02:45.320 And that was Hong Kong before the handover, so Chile 0:02:46.000 --> 0:02:50.040 Hong Kong. You started being as a consultants, end up 0:02:50.120 --> 0:02:53.080 everywhere from Sydney to Boston and then back to Hong Kong. 0:02:53.360 --> 0:02:56.359 Tell us a little bit about that global experience. How 0:02:56.400 --> 0:02:59.680 has that changed how you look at the world of investing. 0:03:00.320 --> 0:03:03.040 Yeah, I sort of have always felt a little bit 0:03:03.080 --> 0:03:05.600 like an outsider in the way I look at things. 0:03:05.680 --> 0:03:09.079 I never felt like I was exactly part of the 0:03:09.160 --> 0:03:10.960 community or the sort of the. 0:03:12.919 --> 0:03:14.600 Consensus view of things. 0:03:14.600 --> 0:03:17.119 I was always thinking about things a little bit more differently, 0:03:17.160 --> 0:03:20.120 I guess given the background. I was always comparing things 0:03:20.480 --> 0:03:21.840 when I was growing up in the US, I was 0:03:21.840 --> 0:03:23.799 always comparing things in the US to the way things 0:03:23.840 --> 0:03:25.720 were in Chile and saying, Oh, this is different or 0:03:25.720 --> 0:03:27.640 that's different. Then when I moved to Hong Kong, I 0:03:27.639 --> 0:03:29.520 had the same perspective. I was thinking, Wow, there's a 0:03:29.560 --> 0:03:31.920 lot that I see happening all my friends working on 0:03:31.960 --> 0:03:34.480 Wall Street or in private equity firms in the late 0:03:34.520 --> 0:03:37.680 eighties early nineties, that's not yet happening here in Hong Kong. 0:03:38.040 --> 0:03:39.960 It felt like there was a gap. It felt like 0:03:40.000 --> 0:03:40.880 there was a gap. 0:03:40.680 --> 0:03:43.520 There, and that always intrigued me and got me motivated 0:03:43.560 --> 0:03:46.480 and interested in thinking about starting something new that would 0:03:46.560 --> 0:03:49.880 sort of try to take advantage of it, or take 0:03:49.880 --> 0:03:52.840 advantage of that opportunity created by that gap. Of what 0:03:53.320 --> 0:03:56.520 eventually made me coming to Asia, that's already happening in 0:03:56.520 --> 0:03:59.120 the US, and that's sort of what led me to 0:03:59.160 --> 0:04:04.240 eventually leave insulting, get into private equity in the early nineties, 0:04:04.960 --> 0:04:08.200 which was really very early in Asian in in Asian 0:04:08.240 --> 0:04:12.440 context in the private equity industry, and from there sort 0:04:12.480 --> 0:04:14.120 of to start building the business. 0:04:13.840 --> 0:04:17.800 So you leave Bain was the next up AIG Global 0:04:17.920 --> 0:04:21.440 Investment there there? Did you help set up their pe 0:04:21.720 --> 0:04:23.320 arm or was that already up and running. 0:04:23.600 --> 0:04:28.160 No, that AIG was essentially an insurance business. 0:04:28.240 --> 0:04:28.640 AIG. 0:04:29.160 --> 0:04:32.320 Some of your listeners might recall Hank Greenberg, who's sort 0:04:32.320 --> 0:04:35.200 of a legend really kind of started He actually didn't 0:04:35.200 --> 0:04:38.120 start that business, but was really the founder that grew 0:04:38.160 --> 0:04:42.080 the business beyond the founder CV Star's initial starting of 0:04:42.080 --> 0:04:45.359 the business in Shanghai of ball places, and that became 0:04:45.520 --> 0:04:48.920 a large global insurance company. And in those days in Asia, 0:04:48.920 --> 0:04:51.320 there really wasn't a private equity industry, but there were 0:04:51.360 --> 0:04:55.120 insurance companies like AIG that had long dated liabilities and 0:04:55.160 --> 0:04:57.640 they needed to find long dated assets, and so you 0:04:57.760 --> 0:05:00.120 had stock market and fixed income and so on. But 0:05:00.240 --> 0:05:03.039 in the private markets there wasn't really a fund to 0:05:03.120 --> 0:05:05.520 invest in per se, so they started making their own 0:05:05.600 --> 0:05:09.080 investments off their balance sheet into companies to match their 0:05:09.120 --> 0:05:12.159 long dated liabilities. And so it was really working for 0:05:12.640 --> 0:05:16.479 AIG in their internal private equity group that got me 0:05:16.520 --> 0:05:17.560 started in the industry. 0:05:17.680 --> 0:05:22.080 Foundational experience at AIG, that's really in private equity. That's 0:05:22.080 --> 0:05:23.640 a sentence you don't hear of that often. 0:05:23.880 --> 0:05:24.720 Yeah, it was. 0:05:24.800 --> 0:05:25.719 It was early days. 0:05:25.760 --> 0:05:30.120 It was interesting because you know, the whole region was 0:05:30.200 --> 0:05:34.920 really starting to boom. It was the golden period of globalization, 0:05:35.680 --> 0:05:38.440 you know, with the emergence of not just China, but 0:05:39.040 --> 0:05:44.960 Southeast Asia, Thailand, Indonesia, Taiwan, Korea, all these markets were 0:05:45.000 --> 0:05:48.000 starting to really develop and industrialize and there was a 0:05:48.000 --> 0:05:51.280 lot of requirement for capital for growth, and so we 0:05:51.279 --> 0:05:53.440 were really growth investors in those days, putting money to 0:05:53.440 --> 0:05:55.280 work behind companies and helping them to grow. 0:05:55.640 --> 0:05:59.280 And then you moved from investor to operator you as 0:05:59.360 --> 0:06:04.440 executive president. You run finance for Shoeing Steel that's a 0:06:04.600 --> 0:06:07.880 giant Hong Kong industrial What was that experience. 0:06:07.480 --> 0:06:10.000 Like, Yeah, that actually that happened before I left to 0:06:10.040 --> 0:06:12.280 do the private exit, So it was vain then shoeing, 0:06:12.360 --> 0:06:16.520 and then and then ai G. But the Shoeing experience, it's, uh, 0:06:16.600 --> 0:06:20.000 it's a part of my background that is a little 0:06:20.000 --> 0:06:23.320 bit different because it's really it's a family business that 0:06:24.520 --> 0:06:28.880 is an industrial company, very traditionally run. It's actually my 0:06:28.960 --> 0:06:32.520 wife's family business. So yeah, it's it's really uh, it 0:06:32.560 --> 0:06:33.880 was a very different experience. 0:06:33.920 --> 0:06:37.560 I went from I can imagine, Yes, I went from 0:06:37.640 --> 0:06:43.839 baning company, you know, sort of business schools down you know, 0:06:43.920 --> 0:06:47.839 everybody has similar backgrounds, very analytical, to the opposite end 0:06:47.880 --> 0:06:50.160 of the spectrum, which is it's a family business. 0:06:50.720 --> 0:06:53.600 Everybody who's in management is related to each other. And 0:06:53.640 --> 0:06:56.480 then uh, you know, you're making decisions based on sort 0:06:56.480 --> 0:06:58.159 of traditional ways of doing things. 0:06:58.240 --> 0:07:01.720 But this isn't a small little family dry claian Er. 0:07:02.120 --> 0:07:05.200 It's a big business, giant conglomerate. It was a. 0:07:04.880 --> 0:07:08.359 Sizable business and it was a good experience for me 0:07:08.440 --> 0:07:11.800 because it sort of helped me shape in the very 0:07:11.840 --> 0:07:15.680 formative years of my career, an appreciation for both. 0:07:15.440 --> 0:07:16.400 Sides of the spectrum. 0:07:16.440 --> 0:07:19.560 On the one hand, you have the need to be analytical, rigorous, 0:07:19.960 --> 0:07:22.240 understand global trends and sort of the way you look 0:07:22.240 --> 0:07:24.440 at things as a business school student. On the other hand, 0:07:24.440 --> 0:07:26.040 if you're going to do business in Asia, you have 0:07:26.080 --> 0:07:27.920 to be a little more entrepreneurial. You have to listen 0:07:27.920 --> 0:07:29.800 to your instinct. You have to be able to develop 0:07:29.840 --> 0:07:33.960 relationships with people, because ultimately, the decision makers in that 0:07:34.080 --> 0:07:35.800 part of the world, a lot of them have those 0:07:35.840 --> 0:07:37.600 sorts of backgrounds, and so you need to be able 0:07:37.640 --> 0:07:40.520 to understand how they think. And so that was a 0:07:40.640 --> 0:07:44.000 very valuable experience during my formative years. But I kind 0:07:44.000 --> 0:07:47.320 of came to the view that I didn't really want 0:07:47.360 --> 0:07:49.480 to spend the rest of my career in that sort 0:07:49.480 --> 0:07:52.320 of a setup, and so I applied to business school, 0:07:52.560 --> 0:07:55.800 and I got into business school. I got into Harvard 0:07:55.800 --> 0:07:59.240 Business School actually, and I was about to start at Harvard. 0:08:00.440 --> 0:08:04.600 I literally was there registered. I'm actually in the picture book, 0:08:04.960 --> 0:08:07.200 ready to go. And that's when I got the job 0:08:07.240 --> 0:08:10.679 offer to come back and work for this private equity 0:08:11.000 --> 0:08:15.880 division of AIG, which I decided ultimately that's really what 0:08:15.920 --> 0:08:17.920 I wanted to do rather go back to school again, 0:08:18.120 --> 0:08:21.560 having gone to undergraduate for a business degree already, and 0:08:21.640 --> 0:08:25.520 so I decided to defer my business school go back 0:08:25.520 --> 0:08:28.680 to work in Asia in private equity, and ultimately I 0:08:28.720 --> 0:08:30.720 actually never ended up really coming back to school. 0:08:31.080 --> 0:08:36.040 So after AIG, you helped launch a regional Asian private 0:08:36.080 --> 0:08:41.960 equity program for Bearing Private Equity Partners, a UK based bank. Right, yeah, 0:08:42.120 --> 0:08:46.120 I have the timeline, right, So I'm fascinated nineteen ninety seven. 0:08:46.800 --> 0:08:51.079 What was the investment landscape in Asia like in the nineties, 0:08:51.640 --> 0:08:56.559 Was that a very underappreciated set of opportunities or had 0:08:56.640 --> 0:08:59.520 people started to sniff out, hey, this area is going 0:08:59.559 --> 0:09:00.000 to be boom. 0:09:00.760 --> 0:09:04.319 It was a very very un volatile period actually, if 0:09:04.320 --> 0:09:06.320 you recall was going on at the time. So two 0:09:06.320 --> 0:09:10.720 things happened in nineteen ninety five. Nick Leeson, this is 0:09:10.840 --> 0:09:13.760 just around the time that I was joining Bearing Private Equity. 0:09:13.880 --> 0:09:15.800 Nick Leeson, who was a name that some of your 0:09:15.840 --> 0:09:19.720 listeners mare may recognize, others may not. He brought down 0:09:19.920 --> 0:09:21.280 this three hundred. 0:09:21.080 --> 0:09:22.760 Year old broke Bearings back. 0:09:22.840 --> 0:09:26.520 He broke the bank out of Singapore actually trading Japanese 0:09:26.520 --> 0:09:29.960 stock futures and kind of covering up his losses, which 0:09:29.960 --> 0:09:30.680 eventually brought the. 0:09:30.640 --> 0:09:31.280 Whole bank down. 0:09:31.360 --> 0:09:33.920 It was a you know, three hundred year old bank 0:09:33.960 --> 0:09:36.280 and one of the most prominent firms. So what ended 0:09:36.320 --> 0:09:41.240 up happening is that the Dutch firm Ing took over 0:09:41.320 --> 0:09:44.600 Bearings Famously for one pound and assumed all their liabilities 0:09:45.120 --> 0:09:47.439 and they took it over. This is around the time 0:09:47.480 --> 0:09:49.319 that I had joined, and you know, at the time, 0:09:49.400 --> 0:09:51.960 I remember thinking this is a very unsettling this is 0:09:52.200 --> 0:09:53.400 you know, I don't know what I'm going to do. 0:09:53.480 --> 0:09:54.439 I was very worried. 0:09:54.920 --> 0:09:58.439 I just decided to leave AIG and join this new 0:09:58.440 --> 0:10:01.680 company bearing private equity. In hindsight, sitting here today, I 0:10:01.720 --> 0:10:03.640 can say it's probably one of the best things that 0:10:03.640 --> 0:10:05.560 ever happened to me, was to be able to step 0:10:05.600 --> 0:10:08.000 into a situation that was going through a lot of change. 0:10:08.360 --> 0:10:10.360 And I think it is an important lesson in life 0:10:10.400 --> 0:10:13.360 actually that there are these times when you go through 0:10:14.000 --> 0:10:17.880 There's serendipity number one, so luck. There's also the fact 0:10:17.920 --> 0:10:21.920 that you're often thrust into situations you don't expect, and 0:10:22.040 --> 0:10:25.080 it kind of boils down to how you end up 0:10:25.120 --> 0:10:29.239 responding to them and looking for the best possible outcomes 0:10:29.320 --> 0:10:32.280 or the best way out of a situation can sometimes 0:10:32.320 --> 0:10:35.040 lead to huge opportunities, which is what happened here because 0:10:35.080 --> 0:10:39.160 that confusion of the takeover by IG of Bearings resulted 0:10:39.160 --> 0:10:42.079 in Bearings essentially figuring that they didn't need. 0:10:41.920 --> 0:10:44.160 To have some of these non core businesses. 0:10:44.520 --> 0:10:47.360 And so I approached the new Dutch owners and asked 0:10:47.400 --> 0:10:49.720 them if it was okay if we spun our business out. 0:10:50.040 --> 0:10:53.079 At the time, which we did, it was a very 0:10:53.080 --> 0:10:55.240 small business. It was a twenty five We had twenty 0:10:55.240 --> 0:10:58.839 five million dollars of assets under management, which even in 0:10:58.880 --> 0:11:01.640 those days was not a lot of mine, and we 0:11:01.720 --> 0:11:04.720 were really just getting started. And they agreed, and so 0:11:04.800 --> 0:11:08.240 we ended up establishing an independent, small private equity business 0:11:08.240 --> 0:11:09.800 called Bearing Private Equity Asian. 0:11:09.600 --> 0:11:14.480 So kept the name. We kept the name BPA. 0:11:14.640 --> 0:11:18.640 There was this tremendous transition from what was essentially a 0:11:18.720 --> 0:11:24.199 startup to what eventually became a pretty substantial institution. What 0:11:24.280 --> 0:11:24.959 was that like. 0:11:26.800 --> 0:11:29.960 Initially we were starting off and again it was nineteen 0:11:30.000 --> 0:11:32.439 ninety seven, ninety six, ninety seven, so if he recalled 0:11:32.480 --> 0:11:35.360 nineteen ninety seven was actually the Asian Financial crisis, as 0:11:35.400 --> 0:11:39.959 I referred to which was a terrible period of huge 0:11:39.960 --> 0:11:43.800 currency devaluations, starting with a ruble in Russia, but then 0:11:43.840 --> 0:11:45.360 sort of a contagion effect throughout. 0:11:45.400 --> 0:11:48.080 The ruble was worse the following year with long term 0:11:48.120 --> 0:11:51.480 capital management, if my memory is great. So the Asian 0:11:51.480 --> 0:11:53.800 contagion was the tie Bot crisis. 0:11:53.480 --> 0:11:57.440 And it was it was the Indonesian sort of high 0:11:57.520 --> 0:12:01.160 yield market as well that blew up. We're basically borrowing 0:12:01.200 --> 0:12:04.040 dollars because it was cheaper to do so, using that 0:12:04.160 --> 0:12:07.000 money to then invest in their businesses in Asia, thinking 0:12:07.040 --> 0:12:09.640 that they could make the spread and kind of capture that. 0:12:09.559 --> 0:12:11.720 As long as the currency stay stable, which. 0:12:11.760 --> 0:12:14.480 Is okay, but then it isn't till it isn't right. 0:12:14.520 --> 0:12:17.440 So that's what happened, and so that blew out and 0:12:17.480 --> 0:12:20.480 it caused a tremendous financial crisis across the whole region. 0:12:21.600 --> 0:12:23.120 And this is in the middle of when we were 0:12:23.120 --> 0:12:25.680 getting started. So I remember we're writing the first PPM, 0:12:25.720 --> 0:12:28.600 the first private placement memo to go raise capital, and 0:12:28.760 --> 0:12:31.200 the whole story was in ninety six was about growth 0:12:31.200 --> 0:12:34.000 in Asia, the growth story, and halfway through that writing 0:12:34.000 --> 0:12:37.120 the PPM, we had to basically change the PPM and 0:12:37.240 --> 0:12:40.400 change the strategy to become more of a distress strategy 0:12:40.440 --> 0:12:43.320 on how we're going to capitalize on the dislocation in 0:12:43.400 --> 0:12:46.760 Asia to invest in great companies that have bad balance sheets, 0:12:47.080 --> 0:12:49.080 which is sort of what we did with that first 0:12:49.080 --> 0:12:51.920 twenty five million that we started with, because what happened 0:12:51.960 --> 0:12:55.320 was that Ing gave us that seed capital to get 0:12:55.320 --> 0:12:57.080 going with, which was the twenty five million. They were 0:12:57.080 --> 0:12:58.960 supposed to give us three hundred but it ended up 0:12:59.000 --> 0:13:01.800 not coming through, so we started with twenty five. 0:13:01.600 --> 0:13:05.080 Why is it that the indications of interest and the 0:13:05.280 --> 0:13:09.440 actual cash there's such as a multiple between the two. 0:13:09.880 --> 0:13:12.040 What happened in my case is that there were supposed 0:13:12.080 --> 0:13:13.680 to be three of us that were coming across to 0:13:13.679 --> 0:13:16.640 start the business. There was two very senior guys from 0:13:16.640 --> 0:13:20.400 AIG actually that were poached by Bearings to start the 0:13:20.480 --> 0:13:22.800 business for them in Asia, and they asked me, the 0:13:23.120 --> 0:13:25.480 young kid who was doing all the number crunching, to 0:13:25.640 --> 0:13:27.880 join them to do the actual work. And I said, 0:13:27.880 --> 0:13:31.400 I'd be delighted to because it's such an exciting entrepreneurial opportunity. 0:13:31.640 --> 0:13:32.560 You know, here I am. 0:13:32.679 --> 0:13:34.720 A young junior analyst and I get a chance to 0:13:34.760 --> 0:13:37.520 be potentially a partner in this startup, so I thought, 0:13:37.960 --> 0:13:40.520 I raised my hand. As we were about to get started, 0:13:40.600 --> 0:13:43.960 the two senior guys got a counter offer from Hank Greenberg, 0:13:44.320 --> 0:13:46.200 who called them up and say, hey, you guys are 0:13:46.200 --> 0:13:46.720 too important. 0:13:46.720 --> 0:13:47.520 We want you to stay. 0:13:47.559 --> 0:13:50.240 Here's all this money and equity and that, you know, 0:13:50.320 --> 0:13:52.960 to convince you to stay. But he didn't make me 0:13:53.000 --> 0:13:56.000 a counter offer. He just cut me loose. So those 0:13:56.040 --> 0:13:59.520 guys accepted the counter offer. I was there, left on 0:13:59.559 --> 0:14:02.320 my own, and I went back to the IG folks 0:14:02.320 --> 0:14:04.719 and I said, here, I am, I'm ready to do this. 0:14:05.000 --> 0:14:07.320 They said, well, you're a little young and inexperience. It's 0:14:07.360 --> 0:14:10.160 not what we're expecting. We're going to slash the capital 0:14:10.200 --> 0:14:12.440 that we commit to this from three hundred to twenty five, 0:14:12.600 --> 0:14:15.680 less than ten percent, said I said. That's good enough 0:14:15.720 --> 0:14:17.960 for me. I said, I'll take that. That sounds good. 0:14:18.600 --> 0:14:20.640 So we started with twenty five and we did five 0:14:20.680 --> 0:14:23.000 deals of five million each, and it turned out that 0:14:23.120 --> 0:14:25.800 because of the cycle where we were, we were lucky 0:14:25.840 --> 0:14:28.480 to be able to buy in at good prices and 0:14:28.520 --> 0:14:29.920 we bought some interesting businesses. 0:14:30.160 --> 0:14:33.160 Huh, that sounds really that got us started. Basically, Yeah, 0:14:33.160 --> 0:14:38.920 that sounds really really quite fascinating. So BPA was in China, India, 0:14:39.080 --> 0:14:45.240 Southeast Asia, Japan, Korea. Here's the thing that I'm fascinated. Okay, 0:14:45.280 --> 0:14:47.680 So maybe New York is different than Florida, is different 0:14:47.720 --> 0:14:51.120 than Texas, is different than California, but we all speak 0:14:51.160 --> 0:14:54.080 the same language more or less. It's the same laws, 0:14:54.120 --> 0:14:58.920 it's the same regulatory structure. When you're working throughout Asia, 0:15:00.120 --> 0:15:03.160 this different legal system, This is a different cultural dynamic, 0:15:03.200 --> 0:15:08.000 they're different political dynamics. How do you build relationships, how 0:15:08.000 --> 0:15:12.400 do you build a knowledge base and navigate? Like is 0:15:12.520 --> 0:15:16.800 from an American perspective? Are those countries more similar than 0:15:16.880 --> 0:15:20.680 we imagine? Or am I teeing this up correctly? Each 0:15:20.760 --> 0:15:24.920 one is its own, independent, unique region. 0:15:25.000 --> 0:15:27.600 You're absolutely right about that, and that actually is the 0:15:27.680 --> 0:15:29.840 key I think to what we've been able to achieve 0:15:29.880 --> 0:15:35.440 over three decades, was that overcoming those barriers, because ultimately 0:15:36.640 --> 0:15:39.160 people think of Asia, they call it Asia, but it's 0:15:39.240 --> 0:15:43.320 really a first of all geographic, it's a huge, huge expansive. 0:15:43.560 --> 0:15:47.080 You know, from Tokyo to Sydney, it's like a twelve 0:15:47.120 --> 0:15:50.680 hour flight, you know, and from you know, from even 0:15:50.720 --> 0:15:53.600 from Hong Kong all the way to India, it's still 0:15:53.680 --> 0:15:57.480 a pretty long distance and culturally, you're talking about a 0:15:58.080 --> 0:16:03.040 very significant difference in the local culture, the language, the 0:16:03.040 --> 0:16:06.320 ways of doing business. So what we did initially was, 0:16:06.400 --> 0:16:07.920 you know, and we were actually criticized for this in 0:16:07.920 --> 0:16:10.960 the early days because in those days people just did single. 0:16:10.640 --> 0:16:11.960 Country funds for that very reason. 0:16:11.960 --> 0:16:13.880 You had a China fund, you had you know, you 0:16:13.920 --> 0:16:17.080 had a sort of Japan fund and Korea fund. And 0:16:17.160 --> 0:16:18.840 what we set out to do was to say, okay, 0:16:18.840 --> 0:16:21.040 we're going to create a regional investment program. People looked 0:16:21.040 --> 0:16:22.800 at me and said, what do you know about investing 0:16:22.840 --> 0:16:24.560 in Japan? Or like, what do you know about India? 0:16:24.560 --> 0:16:27.960 You're not even from Asia. And so what I early 0:16:28.120 --> 0:16:30.280 on appreciate it, and this has been an important lesson 0:16:30.320 --> 0:16:32.880 in my career is that actually being a good investor 0:16:33.000 --> 0:16:36.440 is very important for what we do in our industry. 0:16:36.920 --> 0:16:38.960 But if you want to build a company, which was 0:16:39.000 --> 0:16:41.359 always my ambition, if you want to build a business 0:16:41.400 --> 0:16:43.960 out of it, you need to actually build a team, 0:16:44.320 --> 0:16:46.760 not just be a good investor. Being a good investor 0:16:46.840 --> 0:16:48.680 is kind of prerequisite to be in our industry, but 0:16:48.720 --> 0:16:50.880 beyond that, it's really about building a team. 0:16:51.360 --> 0:16:53.200 And so I was lucky. 0:16:52.960 --> 0:16:55.680 Enough to meet and to and to bring on board 0:16:55.800 --> 0:17:00.520 some great partners early on, very diverse backgrounds. So you know, 0:17:00.600 --> 0:17:02.880 we have people even to this day and in those 0:17:02.960 --> 0:17:05.760 days from each of these markets. So you know, we 0:17:05.800 --> 0:17:08.760 had great partners from China, from Taiwan on our team 0:17:08.800 --> 0:17:11.480 that we hired early on. We had a very good 0:17:11.480 --> 0:17:13.920 team in India on the ground in Mumbai. We call 0:17:13.960 --> 0:17:16.480 it now local with locals, where you have local teams 0:17:16.520 --> 0:17:19.800 in each market. In two thousand and five, we opened 0:17:19.880 --> 0:17:21.600 up an office in Japan and we hired a great 0:17:21.600 --> 0:17:24.840 team in Japan of great people there. As we're building 0:17:25.240 --> 0:17:27.880 the team a you needed to have people from those 0:17:27.880 --> 0:17:30.040 markets that understood those markets. But the next question is 0:17:30.080 --> 0:17:31.520 how do you stitch it all together? You know, how 0:17:31.600 --> 0:17:34.160 do you create that common thread? And that comes down 0:17:34.200 --> 0:17:38.640 to culture and building a culture of like minded people. 0:17:39.040 --> 0:17:41.120 And so I started to really also gain a huge 0:17:41.119 --> 0:17:44.399 appreciation for the importance of culture in a business. And 0:17:44.760 --> 0:17:48.320 that's something by the way that EQT has I think, 0:17:48.359 --> 0:17:51.040 really excelled in globally. And one of the reasons I 0:17:51.080 --> 0:17:53.879 was ultimately attracted to EQT in combining our business with 0:17:53.960 --> 0:17:57.119 EQT four or five years ago was that Connie Johnson, 0:17:57.160 --> 0:18:00.000 the founder of EQT, early on with the Wallenberg's back 0:18:00.000 --> 0:18:06.680 backing realize that culture ultimately drives performance in an investment 0:18:06.760 --> 0:18:10.520 organization like ours. So built an organization with tremendous culture, 0:18:11.160 --> 0:18:14.399 and our culture was actually somewhat similar. So we were 0:18:14.400 --> 0:18:16.360 able to bring the two cultures together and the cultural 0:18:16.400 --> 0:18:19.520 fit ended up being what made that merger so successful. 0:18:19.960 --> 0:18:22.760 But going back to building the Asia business, building the 0:18:22.800 --> 0:18:25.520 team on the ground, building the common culture, and then 0:18:25.680 --> 0:18:28.240 it was sort of how do we institutionalize this instead 0:18:28.240 --> 0:18:30.639 of just doing deals here, doing deals there, how do 0:18:30.720 --> 0:18:34.400 we create a unified, systematic approach? And this is where 0:18:34.400 --> 0:18:37.040 my main days sort of came in of thinking, let's 0:18:37.040 --> 0:18:39.160 come up with some constructs about how we think about 0:18:39.200 --> 0:18:42.199 capital allocation, how we think about diversification, how do we 0:18:42.240 --> 0:18:44.600 think about macro, how do we think about sector trends, 0:18:44.760 --> 0:18:47.000 how do we think about our investment committee process? How 0:18:47.000 --> 0:18:50.560 do we drive due diligence systematic due diligence in every 0:18:50.560 --> 0:18:52.680 market so we have quality control in each market. 0:18:52.760 --> 0:18:54.360 It's not just random. 0:18:54.040 --> 0:18:56.240 Deal makers doing things the way that they want to 0:18:56.280 --> 0:18:59.040 do them on the ground, and so pulling all that together, 0:18:59.160 --> 0:19:01.320 which it took a lot of time. I'm making it. 0:19:01.359 --> 0:19:03.520 I'm shortening it here, but you know, there was a 0:19:03.520 --> 0:19:05.240 lot of ups and downs. There, a lot of mistakes, 0:19:05.280 --> 0:19:08.800 a lot of setbacks, but eventually we got there and 0:19:08.840 --> 0:19:11.600 we find our strategy over the years and we created 0:19:11.640 --> 0:19:14.119 something that's actually quite hard to replicate, which is this 0:19:14.240 --> 0:19:18.439 regional platform delivering consistent outcomes with a great team of 0:19:18.480 --> 0:19:21.520 consistent of people that have been with us a long 0:19:21.560 --> 0:19:25.600 time and that have a similar approach to underwriting and 0:19:25.960 --> 0:19:29.800 ultimately great performance. And so all that going from twenty 0:19:29.840 --> 0:19:31.800 five million where we ended up. By the time we 0:19:31.840 --> 0:19:33.840 did the deal with EQT, we had twenty five billion 0:19:33.880 --> 0:19:36.960 under management over the spans of what was twenty five 0:19:37.040 --> 0:19:38.240 years of billion. 0:19:38.240 --> 0:19:41.320 The business coming up, we continue our conversation with Jean 0:19:41.440 --> 0:19:46.800 Eric Salata, chairman of EQT Group, discussing the combination of 0:19:46.960 --> 0:19:51.960 BPA and EQT. I'm Barry Ridaults. You're listening to Masters 0:19:51.960 --> 0:20:10.000 in Business on Bloomberg Radio. I'm Barry Ridolts. You're listening 0:20:10.040 --> 0:20:13.679 to Masters in Business on Bloomberg Radio. My extra special 0:20:13.720 --> 0:20:17.240 guest this week is Jean Eric Salata. He is chair 0:20:17.359 --> 0:20:22.320 of EQT Group, one of the largest alternative managers outside 0:20:22.359 --> 0:20:26.360 of the US, they managed three hundred and sixteen billion dollars. 0:20:26.800 --> 0:20:30.880 So let's talk a little bit about how this all came. 0:20:30.960 --> 0:20:36.199 About twenty twenty two, you merge BPA with EQT. That 0:20:36.359 --> 0:20:41.359 was a seven billion dollar deal that followed about twenty 0:20:41.400 --> 0:20:47.240 five years of independence. What led to that decision to merge? 0:20:47.640 --> 0:20:52.120 What could EQT offer that BPA couldn't build on its own? 0:20:52.840 --> 0:20:53.040 Yeah? 0:20:53.560 --> 0:20:55.840