Riding Global Tailwinds with EQT's Jean Eric Salata

Barry speaks with Jean Eric Salata, chair of EQT group. They discuss his time working in Asian private equity investment along with what he sees as necessary to become a good investor across different cultures including what he learned in Japan and Hong Kong. See omnystudio.com/listener https://omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

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• 2:04Barry Ritholtz?

  I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest today is Jean Eric Salata. He is Chair of the EQT Group, the largest alternative manager outside of the US. They manage over $316 billion. Previously, he helped set up the Baring's Private Equity Asia Group and built it into one of Asia's premier private equity platforms. With no further ado,

• 2:47Barry Ritholtz?

  Jean Eric Salata, welcome to Bloomberg.

• 2:50Speaker 03

  Thank you, Barry. It's great to be here.

• 2:51Barry Ritholtz?

  It's great to have you. I've been looking forward to this conversation for a while. Before we get to EQT, you have a really interesting background, and I want to dive into that a little bit. You grow up in Chile. You go to the Wharton School at University of Penn to get a bachelor's in finance and economics. Was investing always the career plan?

• 3:17Speaker 03

  Well, yes, investing was always the career plan. That's not how I ended up in Asia, but the idea in going to Wharton and becoming an investor was something I always wanted to do since I was a young boy. I remember reading a lot of biographies when I was a kid of business people and being very intrigued by that. I remember having my first paper delivery route when I was like 10 or 11 years old and really enjoying the idea of making money and then actually started investing that money as a young kid in the stock market as well and kind of understanding how that worked. And then when I ended up at Wharton undergraduate and studying finance and management, I got very intrigued with global business outside the US. I come from an international background. My family, we grew up in South

• 4:02Speaker 03

  America. My grandparents actually came from Eastern Europe and were sort of refugees that ended up in South America. So generation to generation, we've been moving around quite a bit. And I always felt like I had a Quite a different perspective on life and the world than a lot of the people I was at school with, and so I was interested in pursuing that. And as luck would have it, or fate would have it, I ended up meeting my girlfriend at the time, who's now my wife, who's from Hong Kong, and I ended up moving there right after I graduated, a year after I graduated from college, and ended up really building my career in Asia as a result of that.

• 4:38Barry Ritholtz?

  And that was Hong Kong before the handover.

• 4:41Speaker 03

  Yeah.

• 4:42Barry Ritholtz?

  So Chile, Hong Kong, you started being as a consultant, end up everywhere, from Sydney to Boston and then back to Hong Kong. Tell us a little bit about that global experience. How has that changed how you look at the world of investing?

• 4:57Speaker 03

  Yeah, I sort of have always felt a little bit like an outsider in the way I look at things. I've never felt like I was exactly part of the community or the sort of the consensus view of things. I was always thinking about things a little bit more differently, I guess, given the background. I was always comparing things. When I was growing up in the US, I was always comparing things in the US to the way things were in Chile and saying, oh, this is different or that's different. Then when I moved to Hong Kong, I had the same perspective. I was thinking, wow, there's a lot that I see happening. All my friends working on Wall Street or in private equity firms in the late 80s, early 90s, that's not yet happening here in Hong Kong. There felt like there was a gap. It felt like there was a gap there. And that always intrigued me and got me motivated and interested in thinking about starting

• 5:42Speaker 03

  something new that would sort of try to take advantage of it or take advantage of that opportunity created by that gap of what's eventually maybe coming to Asia that's already happening in the US. And that's sort of what led me to eventually leave consulting, get into private equity in the early 90s, which was really very early in Asian, in an Asian context, in the private equity industry. And from there, sort of to start building the business.

• 6:11Barry Ritholtz?

  So you leave Bain, was the next stop AIG Global Investment there? Did you help set up their P E arm or was that already up and running?

• 6:20Speaker 03

  No, that was, AIG was essentially an insurance business. AIG, some of your listeners might recall Hank Greenberg, who's a legend, really kind of started. He actually didn't start that business, but was the founder that grew the business beyond the founder C V Star's initial starting of the business in Shanghai of all places. And that became a large global insurance company. And in those days in Asia, there really wasn't a private equity industry, but there were insurance companies like AIG that had long dated liabilities and they needed to find long dated assets. And so you had stock market and fixed income and so on, but in the private markets, there wasn't really a fund to invest in per se. So they started making their own investments off their balance sheet into companies to

• 7:05Speaker 03

  match their long dated liabilities. And so it was really working for AIG in their internal private equity group that got me started in the industry.

• 7:14Barry Ritholtz?

  Foundational experience at AIG, that's really in private equity, that's a sentence you don't hear that often.

• 7:21Speaker 03

  Yeah, it was. It was early days. It was, it was interesting because, you know, the whole region was really starting to boom. It was the golden period of globalization, you know, with the emergence of not just China, but Southeast Asia, Thailand, Indonesia, Taiwan, Korea, all these markets were starting to really develop and industrialize. And there was a lot of requirement for capital, for growth. And so we were really growth investors in those days, putting money to work behind companies and helping them to grow.

• 7:52Barry Ritholtz?

  And then you moved from investor to operator. You, as Executive Vice President, you run finance for Shoe Wing Steel? That's a giant Hong Kong industrial. What was that experience like?

• 8:05Speaker 03

  Yeah, that actually, that happened before I left to do the private equity. So it was Bain, then Shoe Wing, and then, and then AIG. But the Shoe Wing experience, it's, it's a part of my background that is a little bit different. Because it's really, it's a family business that is, was an industrial company, very traditionally run. It's actually my wife's family business.

• 8:27Barry Ritholtz?

  Oh, really?

• 8:28Speaker 03

  Yeah, it's, it's really, uh, it was a very different experience. I went from

• 8:31Barry Ritholtz?

  I can imagine.

• 8:32Speaker 03

  Yes. I went from Bain and Company, you know, sort of business school

• 8:38Barry Ritholtz?

  Very buttoned down, right?

• 8:40Speaker 03

  Down, uh, you know, everybody has similar backgrounds, very analytical, to the opposite end of the spectrum, which is, it's, it's a family business. Everybody who's in management is related to each other. And then, uh, you know, you're making decisions based on, uh, sort of traditional ways of doing things.

• 8:55Barry Ritholtz?

  But this isn't a small, little family dry cleaner. This is

• 8:59Speaker 03

  It's a big business.

• 9:00Barry Ritholtz?

  They're a giant conglomerate.

• 9:01Speaker 03

  It was a sizable business and, uh, it was, it was a good experience for me because it sort of helped me shape in the very formative years of my career. An appreciation for both sides of the spectrum. On the one hand, you have the need to be analytical, rigorous, understand global trends and sort of the way you look at things as a business school student. On the other hand, if you're going to do business in Asia, you have to be a little more entrepreneurial. You have to listen to your instinct. You have to be able to develop relationships with people. Uh, because ultimately the decision makers in, in that part of the world, a lot of them have those sorts of backgrounds. And so you need to be able to understand how they think. And so that was a very valuable experience during my formative years. But I kind of came to the view that I didn't really, um,

• 9:44Speaker 03

  want to spend the rest of my career in that sort of a setup. And so I applied to business school and I got into business school. Uh, I got into Harvard Business School, actually, and I was about to start at Harvard. I literally was there, uh, registered. I'm actually in the picture book, ready to go. And that's when I got the job offer to come back and work for, um, for this private equity, uh, division of AIG, which I decided, uh, ultimately that's really what I wanted to do rather than go back to school again, having gone to undergraduate for a business degree already. And so I decided to defer my business school, uh, go back to work, uh, in Asia in private equity. And ultimately I actually never ended up really coming back to school.

• 10:28Barry Ritholtz?

  So after AIG, you helped launch a regional Asian private equity program for Baring Private Equity Partners, a UK-based bank, right?

• 10:39Speaker 03

  Yeah.

• 10:39Barry Ritholtz?

  Did I have the timeline right?

• 10:40Speaker 03

  Yeah.

• 10:40Barry Ritholtz?

  So I'm fascinated, 1997. What was the investment landscape in Asia like in the 90s? Was that a very underappreciated set of opportunities? Or had people started to sniff out, hey, this area is going to be booming?

• 10:58Speaker 03

  It was a very, very volatile period, actually. If you recall what was going on at the time, so two things happened. In 1995, Nick Leeson, this is just around the time that I was joining Baring Private Equity. Nick Leeson, who is a name that some of your listeners may recognize, others may not. He brought down this 300-year-old.

• 11:19Barry Ritholtz?

  Broke Baring's bank?

• 11:20Speaker 03

  He broke the bank, out of Singapore, actually, trading Japanese stock futures and kind of covering up his losses, which eventually brought the whole bank down. It was a 300-year-old bank and one of the most prominent firms. So what ended up happening is that the Dutch firm ING took over Baring's famously for one pound and assumed all their liabilities. And they took it over, and this is around the time that I had joined. You know, at the time, I remember thinking, oh, this is very unsettling. This is, you know, I don't know what I'm going to do. I was very worried. I just decided to leave AIG and join this new company, Baring Private Equity. In hindsight, sitting here today, I can tell you it's probably one of the best things that ever happened to me, was to be able to step into a situation that was going through a lot of change.

• 12:05Speaker 03

  And I think it is an important lesson in life, actually, that there are these times when you go through, there's serendipity, number one, so luck. There's also the fact that you're often thrust into situations you don't expect. And it kind of boils down to how you end up responding to them and looking for the best possible outcomes or the best way out of a situation can sometimes lead to huge opportunities, which is what happened here. Because that confusion of the takeover by ING of Baring's resulted in Baring's essentially figuring that. That they didn't need to have some of these non-core businesses. And so I approached the new Dutch owners and asked them if it was okay if we spun our business out at the time, which we did.

• 12:49Speaker 03

  It was a very small business. It was a 25, we had $25 million of assets under management, which even in those days was not a lot of money. And we were, we were really just getting started and they agreed. And so we ended up establishing an independent, small private equity business called Bearing Private Equity Asia.

• 13:06Barry Ritholtz?

  So kept the name.

• 13:07Speaker 03

  We kept the name.

• 13:08Barry Ritholtz?

  BPEA.

• 13:09Speaker 03

  Yeah.

• 13:11Barry Ritholtz?

  There was this tremendous transition from what was essentially a startup to what eventually became a pretty substantial institution. What was that like?

• 13:24Speaker 03

  Initially, we were starting off, and again, it was 1997, 96, 97. So if you recall, 1997 was actually the Asian financial crisis as I referred to, which was a terrible period of huge currency devaluations, starting with the ruble in Russia, but then sort of a contagion effect throughout.

• 13:42Barry Ritholtz?

  The ruble was worse the following year with long-term capital management, if my memory is, is. So the Asian contagion was the Thai bot crisis in 97?

• 13:51Speaker 03

  It was bot, it was the Indonesian sort of, you know, high yield market as well that blew up. People were basically borrowing dollars because it was cheaper to do so, using that money to then invest in their businesses in Asia, thinking that they could make the spread and kind of capture that.

• 14:07Barry Ritholtz?

  As long as the currency stays stable, you trade.

• 14:09Speaker 03

  Which is okay, but then it isn't till it isn't, right? And so that's what happened. And so that blew out and it caused a tremendous financial crisis across the whole region. And this is in the middle of when we were getting started. So I remember we're writing the first PPM, the first private placement memo to go raise capital. And the whole story was in 96 was about growth in Asia, the growth story. And halfway through the writing the PPM, we had to basically change the PPM and change the strategy to become more of a distress strategy on how we're going to capitalize on the dislocation in Asia to invest in great companies that have bad balance sheets, which is sort of what we did with that first 25 million that we started with. Because what happened was that ING gave us that seed capital to get going with, which was the 25 million.

• 14:54Speaker 03

  They were supposed to give us 300, but it ended up not coming through. So we started with 25.

• 14:58Barry Ritholtz?

  Why, why is it that the indications of interest and the actual cash, there's such, there's a multiple between the two?

• 15:07Speaker 03

  What happened in my case is that there were supposed to be three of us that were coming across to start the business. There was two very senior guys from AIG, actually, that were poached by bearings to start their business for them in Asia. And they asked me, the young kid who was doing all the number crunching, to join them to do the actual work. And I said I'd be delighted to because it's such an exciting entrepreneurial opportunity. You know, here I am, a young junior analyst, and I get a chance to be potentially a partner in this startup. So I thought I'd raise my hand. As we were about to get started, the two senior guys got a counter offer from Hank Greenberg, who called them up and said, hey, you guys are too important. We want you to stay. Here's all this money and equity to convince you to stay. But he didn't make me a counter offer.

• 15:51Speaker 03

  He just cut me loose. So those guys accepted the counter offer. I was there, left on my own. And I went back to the ING folks and I said, here I am. I'm ready to do this. They said, well, you're a little young and inexperienced. It's not what we were expecting. We're going to slash the capital that we commit to this from 300 to 25.

• 16:09Barry Ritholtz?

  Less than 10%.

• 16:10Speaker 03

  And I said, that's good enough for me. I said, I'll take that. That's, that sounds good. So we started with 25 and we did five deals of 5 million each. And it turned out that because of the cycle where we were, we were lucky to be able to buy in at good prices. And we bought some interesting businesses.

• 16:27Barry Ritholtz?

  That sounds really-

• 16:29Speaker 03

  That got us started, basically.

• 16:30Barry Ritholtz?

  Yeah, that sounds really, really quite fascinating. So BPA was in China, India, Southeast Asia, Japan, Korea. Here's the thing that I'm fascinated. Okay, so maybe New York is different than Florida is different than Texas is different than California, but we all speak the same language, more or less. It's the same laws. It's the same regulatory structure. When you're working throughout Asia, there's a different legal system. There's a different cultural dynamic. There are different political dynamics. How do you build relationships? How do you build the knowledge base and navigate? Like, is from an American perspective, are those countries more similar than we imagine? Or

• 17:15Barry Ritholtz?

  am I teeing this up correctly? Each one is its own independent, unique region.

• 17:22Speaker 03

  You're absolutely right about that. And that actually is the key, I think, to what we've been able to achieve over three decades, was that overcoming those barriers. Because ultimately-

• 17:34Speaker 03

  People think of Asia, they call it Asia, but it's really a very, first of all geographic is a huge, huge expansive. You know, from Tokyo to Sydney, it's like a 12-hour flight, you know, and from, you know, from, from, even from Hong Kong all the way to India, it's still a pretty long distance. And culturally, you're talking about a very significant difference in the local culture, the local language, the ways of doing business. So what we did initially was, you know, and we were actually criticized for this in the early days because in those days, people just did single-country funds for that very reason. You had a China fund, you had, you know, you had a sort of a Japan fund, a Korea fund.

• 18:14Speaker 03

  And what we set out to do was to say, okay, we're going to create a regional investment program. People looked at me and said, what do you know about investing in Japan? Or like, what do you know about India? You're not even from Asia. And so what I, early on appreciated, and this has been an important lesson in my career, is that actually being a good investor is very important for what we do in our industry. But if you want to build a company, which was always my ambition, if you want to build a business out of it, you need to actually build a team, not just be a good investor. Being a good investor is kind of prerequisite to be in our industry, but beyond that, it's really about building a team. And so I was lucky enough to meet and to bring on board some great partners early on.

• 18:55Speaker 03

  Very diverse backgrounds. So, you know, we have people even to this day and in those days, from each of these markets. So, you know, we had great partners from China, from Taiwan on our team that we hired early on. We had a very good team in India on the ground in Mumbai. We call it now local with locals, where you have local teams in each market. In 2005, we opened up an office in Japan. We hired a great team in Japan of great people there. As we're building the team, A, you needed to have people from those markets that understood those markets, but the next question is, how do you stitch it all together? You know, how do you create that common thread? And that comes down to culture and building a culture of like-minded people.

• 19:36Speaker 03

  And so I started to really also gain a huge appreciation for the importance of culture in a business. And that's something, by the way, that EQ EQT has, I think, really excelled globally. And one of the reasons I was ultimately attracted to EQT and combining our business with EQT four or five years ago was that Connie Johnson, the founder of EQT, early on with the Wallenbergs backing, realized that culture ultimately drives performance in an investment organization like ours. So built an organization with tremendous culture, and our culture was actually somewhat similar. So we were able to bring the two cultures together, and the cultural fit ended up being what made that merger so successful. But going back to, you know, building the Asia business, building the team on the ground,

• 20:21Speaker 03

  building the common culture, and then it was sort of, how do we institutionalize this? Instead of just doing deals here, doing deals there, how do we create a unified systematic approach? And this is where my Bain days sort of came in of thinking, let's come up with some constructs about how we think about capital allocation, how we think about diversification, how do we think about macro, how do we think about sector trends, how do we think about our investment committee process? How do we drive due diligence, systematic due diligence in every market so we have quality control in each market? It's not just random dealmakers doing things the way that they want to do them on the ground. And so pulling all that together, which, you know, it took a lot of time, I'm making it, I'm shortening it here, but, you know, there was a lot of ups and downs, a lot of mistakes, a lot of setbacks.

• 21:04Speaker 03

  But eventually, we got there and refined our strategy over the years, and we created something that's actually quite hard to replicate, which is this regional platform delivering consistent outcomes with a great team of consistent, of people that have been with us a long time and that have a similar approach to underwriting, and ultimately, great performance. And so all that, you know, going from 25 million where we ended up, by the time we did the deal with EQT, we had 25 billion under management over the span of what was 25 years of building the business.

• 21:36Barry Ritholtz?

  Coming up, we continue our conversation with Jean-Eric Salata, chairman of EQT Group, discussing the combination of BPEA and EQT. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.

• 22:03Speaker 00

  At Brookfield, we invest in the thing behind the thing behind the next big thing. Our focus across infrastructure, energy, real estate, private equity and credit is helping to build the backbone of the global economy. We combine deep operational expertise with disciplined long-term investing, uncovering value and partnering alongside clients to shape tomorrow's economy today. Learn how you can own what's next at Brookfield.com/own. This is not an offer to sell or investment advice. Investing involves risks, including loss of capital.

• 22:35Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Businessweek's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 23:19Speaker 01

  and hiring practices, but according to recruiters, advisors and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 24:03Barry Ritholtz?

  I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Jean Eric Salata. He is Chair of EQT Group, one of the largest alternative managers outside of the US. They manage $316 billion. So, so let's talk a little bit about how this all came about. 2022, you merge BPEA with EQT. That was a $7 billion deal. That followed about 25 years of independence. What, what led to that decision to merge? What could EQT offer that BPEA couldn't build on its own?

• 24:47Speaker 03

  Yeah, I, I think what I started to sense in about, say, 2015 was that the industry was changing, our, our industry was changing globally. You started to see global firms moving into Asia. You started to see some firms starting to go public. You started to see multi-product firms developing beyond just a single product, single asset class, scale. And I realized that although we were doing very well and we were very successful in growing, if we wanted to make this a multi-generational business that's going to continue to thrive, we wanted to be part of this industry consolidation, this, this trend towards scale, rather than to be sort of, you know, pushed aside by it.

• 25:30Speaker 03

  And that's when I started thinking, what are our options? I mean, one option was for us to try to expand beyond Asia and to develop our business outside of the region. That was going to be pretty difficult at this stage because the business is becoming so large and entrenched globally. And then I started looking at, at, at ways of, of, of working with others. And that's when I met EQT, really through their own IPO that they had done at the time. They'd gone public in 2018, 2019. And I was curious about that. And I, so I went to speak to them about how they had done that. And we started talking and, you know, one thing led to another. And by the end of this conversation, Became evident to all of us sitting around the table that actually there's something

• 26:13Speaker 03

  here that could be quite powerful if we were to come bring the businesses together.

• 26:17Barry Ritholtz?

  You you mentioned earlier how important culture is to performance in an investment world. I would imagine that a Swedish firm like EQT and essentially a regional Asian firm like BPEA, you would imagine those are very different cultures and there's going to be a challenge integrating the two of them. What was your experience like trying to get all the horses pulling in the same direction?

• 26:47Speaker 03

  Yeah, I think initially you you could imagine that would be the case, but as it turns out, I think a few things here. First of all, EQT started off as a Swedish firm, but it really, by the time we met, had already become a much more global business. So first Swedish, then European, expanding into Europe, and then expanding into the US, had some presence in Asia, not much. Secondly, EQT is backed by the Wallenberg family. The Wallenberg family is a sixth generation family from Sweden that has a history of really doing business globally. Investors in Ericsson, Electrolux, Saab, many of the big Swedish companies, AstraZeneca, are backed by the Wallenberg family.

• 27:30Speaker 03

  And so they have a very global mindset, I would say, in the way they think about doing business globally and culturally. Then I think the other aspect here is there's a difference, I think, between a European firm like EQT and, say, American firms. The European firms already are thinking in terms of, well, every country's different. You've got, you know, the the Nordics are different than Germany, which is different than France, which is different than Southern Europe. And so when they come to Asia, they have, I think, an heightened sense of appreciation for the cultural differences within Asia. And, you know, I think I think that, to me, was really important, that they understand that within Asia, Japan is very different from India and India is very different from China. And so I felt almost like there was a kindred spirit there in understanding that each country,

• 28:14Speaker 03

  each region, the cultures really matter. Then I would say that if you look at the histories of the firm, we're both about 30 Years old at the time, we both had our ups and downs. We both kind of built the business from a founder of Connie and myself. And, you know, I think there was a lot of um common history, shared history there. Uh and ultimately it boiled boiled down to the, I'd say, the chemistry uh of the senior team, but then ultimately the culture throughout. And I felt very comfortable with it and we did some, spent some time together, meeting with the team members, meeting with each other. Uh and we ended up feeling like this was going to be a great fit, still taking a chance and coming and bringing the business together. But having done it now, having been together now for nearly four years, I can tell you it's been a huge success.

• 28:59Speaker 03

  And it really boils down to the fact that the people, the cultural fit um was was very strong. Maybe a good time to talk about the values also of of EQT, which are similar to the values we had at Bearing Private Equity at the time. You know, there's some key values that EQT has. Number one, it's high performing, which is, you know, something that I think most people in the industry are going to focus on. But beyond that, it's also, we focus a lot on on transparency. We focus on being informal. We focus on being entrepreneurial. And we have another fifth value, which is respectful. And if you take all those as a package, you know, what you start to sense is the sort of people that end up coming to EQT, staying at EQT.

• 29:37Speaker 03

  It's not the typical deal maker, kind of Wall Street type of deal maker that you get um in in some uh some of our, parts of our industry. And I think that really appealed to the kind of makeup of our firm at the time. You know, having that really informal um interaction with people, that's a little bit of a Nordic trait, I would say, that this lack of hierarchy. This um, you know, you take a look at Connie, he's the founder of the firm. Um, he's really opened up the ownership of the firm early to all the partners of the firm. The fact that he was even open to combining with my my old business and in a sense diluting even further on a fairly large transaction that you, as you mentioned.

• 30:17Speaker 03

  You know, that speaks to this kind of expansive view of we're trying to build an institution here. It's not about any one individual. It's not about sort of creating a legacy of any one individual. It's about creating a business that's going to last. So that that sort of mindset, I think, really appealed to me and felt like the kind of place that was a good home for the company that we had built as a as a partnership prior to that.

• 30:37Barry Ritholtz?

  Really, really interesting. Let's talk a little bit about how the capital is invested. Sixty-five percent of EQT's capital is in Europe and Asia. How do you think about geographic diversification? It's always a challenge.

• 30:53Speaker 03

  I think diversification is becoming more and more top of mind for global investors, particularly when we talk to our institutional investors, even in the private wealth channels. You're starting to get a sense that people feel overly concentrated, overextended maybe, in US assets. Not to say that US assets are not attractive or that they don't have great prospects, which they do, but having eighty-five, ninety percent of your assets tied into a market that's already highly concentrated is becoming a little bit uneasy for people. So what we're sensing with our clients is a desire to get exposure to more global markets. And what we're strong is we have two-thirds of our businesses outside of the US. We're very strong in Europe, we're very strong in Asia.

• 31:37Speaker 03

  Within those markets, we are also exposed to some of the best sectors. We have a very thematic approach. We invest in healthcare, we invest in technology. Actually, we just announced yesterday, I don't know when this is airing, but we just announced yesterday that we've been awarded the Scale Up Europe Fund mandate by the European Commission, which is a huge deal. They decided to award EQT the management of what's going to be a $5 billion fund that will invest in early-stage technology ventures across Europe to help them to scale up. So kind of Series B onwards in areas like quantum computing, AI, life sciences, AI infrastructure, industrial technology,

• 32:21Speaker 03

  really taking the innovation that exists in Europe and scaling it up to compete globally at global scale with some of the innovation you see in the United States and in China. So we have exposure to some of these really interesting parts of the global investment landscape, and that's very additive to what investors typically would have in their exposure. Their traditional portfolio would be much more heavily weighted towards the US, and this is a way to get a little bit broader global diversification.

• 32:47Barry Ritholtz?

  Really kind of interesting. When we look at the performance of various markets, really going back to the great financial crisis, it feels like Asia and Europe has very much lagged the US up until a year or two ago.

• 33:04Speaker 03

  Exactly.

• 33:04Barry Ritholtz?

  I'm curious how you look at some of the macro tailwinds that Asia is certainly enjoying and as we see a shift towards China in many, many ways, especially leadership. And how do you see Europe? Is some tailwinds, is some headwinds? They seem to be a little more complex than trying to figure out what direction they're heading.

• 33:29Speaker 03

  Yeah. I think what we're starting to see globally right now is this capital, capex supercycle that is playing out with AI infrastructure, but not just AI infrastructure. It also feeds into the reindustrialization, focus on capex for reindustrialization.

• 33:49Barry Ritholtz?

  Reindustrialization?

• 33:50Speaker 03

  Meaning.

• 33:51Barry Ritholtz?

  Explain what that means.

• 33:51Speaker 03

  Meaning sort of the investing back into more of the industrial base of say, the United States or Europe, away from just outsourcing all of that. And so this, this reindustrialization, the AI capex infrastructure, plus the, you know, the whole power, energy transition that's going on with electrification. This is resulting in much more capital intensive investment than we've ever seen before. I mean, the sort of numbers that people are throwing around are just unprecedented. Within our lifetimes, we've never, it's historical, the levels of investment that we're seeing. You know, and that has knock on effects. The knock on effects are throughout the whole supply chain. A lot of the supply chain actually feeds back into Europe. It feeds back into Asia certainly.

• 34:36Speaker 03

  And so this kind of global supply chain of capital expenditures is creating new investment opportunities and demand for capital that we haven't, like we have never seen before in terms of the quantum of money that's required to make this investment play out. So these sort of broadening that exposure across the regions is where we see opportunity. If I look at the world today, you know, the AI infrastructure opportunity globally is probably the single biggest, most interesting investment opportunity. For us, it means investing in a couple of key areas. One is in the compute or data center space. We have one of the largest data center businesses in the world called Edge Connects. It's active both in the US but also in Europe and now increasingly in Asia.

• 35:18Speaker 03

  We have a joint venture in India, for example, with the Adani Group in Edge Connects. And that that data center business has over 90 data centers. It's increased in value. We've owned it now for six, seven years. I think it's increased by 20x in terms of the total installed capacity of the business. We have, in addition to that, we take kind of an end-to-end solutions approach. So we have the compute, but we also have about $100 billion of investment into energy. So the energy, the whole energy grid, you know, power generation and grid and storage. This is a really important part of the comprehensive solution that you need to drive AI compute.

• 36:00Speaker 03

  So we've got the energy, we've got the compute. We're also investing in the digital infrastructure to connect it all, the digital connectivity of all of this. And so if you tie that all together, our infrastructure business is really riding some of these global tailwinds, not just in the US but really doing this globally. Then in addition to that, I'd say the other thing that's pretty interesting, if you take a sort of non-US lens at the world, is what's happening in Japan. And there, the Japanese buyout market is really on a tear. It's it's being driven primarily by some corporate reforms around shareholder reforms and activist shareholder

• 36:40Speaker 03

  increasing activism, shareholder activism, which is supported actually by the Japanese government to improve corporate governance essentially. That's creating opportunities to really focus on shareholder value and to result in a lot more deal flow. The number of transactions that we've seen have, it's this year alone, it's up 60% year to date. The total number of activist shareholder campaigns has doubled in the last few years. Fifty to over a hundred a year on the back of some of these reforms. So you're seeing a whole new market kind of developing there for Japanese buyouts, which is very uncorrelated and very complementary to the traditional buyout opportunities that exist in the United States. And then together with the AI infrastructure opportunity, which is more global,

• 37:25Speaker 03

  there's just a lot happening in our ecosystem, which we see as being very additive, very complementary to just the traditional bread and butter of US exposure to private equity or US infrastructure.

• 37:35Barry Ritholtz?

  So I have so many questions to go from that.

• 37:38Speaker 03

  Sorry, maybe just one last point on that, which is that you started the question off by the outperformers of the market. So what ended up happening last year, as you pointed out, is that the, you know, the stock markets, if you look at listed markets as a proxy, the S and P 500 did pretty well, was up sort of 18% or something like that.

• 37:53Barry Ritholtz?

  Seventeen versus 33 overseas.

• 37:55Speaker 03

  But everything else, you know, in Asia was up much more than that, as it turned out.

• 37:59Barry Ritholtz?

  Korea, amazing.

• 38:00Speaker 03

  Who would have guessed? You know, Korea's up 60% last year and Hong Kong was up, Japan was up in the 30s. And you had, even Europe stock markets did better than the US last year. So the idea that having all your pension, all your retirement money in one market, it's worked pretty well for the time being, but the idea of the correlation and concentration and, you know, markets don't always go up, they go down as well. I think the old diversification strategies do play a role in long-term asset allocation. And that's where EQT, I think, has something to add.

• 38:35Barry Ritholtz?

  I have so many questions about Europe and Japan and Korea and other areas, but I have to come back to China for a moment, which for the better part of the past two or three decades has been the center of Asia. It feels like the geopolitics, the regulatory environment, everything has shifted fairly dramatically. How do you look at China? Are they still, you know, the 800-pound gorilla? Or are there enough offsetting economies that are really growing and seeing gains in their markets that it's not all about China the way it once was 10, 20 years ago?

• 39:19Speaker 03

  The world geopolitically is becoming more polarized and maybe creating more silos in certain strategic areas like technology and defense. As the winds have shifted, that's just the reality of the world that we're living in. Having said that, I do think that there's still this underlying ecosystem of interdependence and a desire, I think, to work together, I hope, in areas like, for example, in medicine. If you look at the biopharma, the biotech industry, there's a lot going on right now between China and the US. A lot of the early-stage trials that are being done, many of those are getting acquired

• 40:04Speaker 03

  by US pharmaceutical companies and then being rolled out for the benefit of humanity all over the world. And these are areas where there's scope, I think, for cooperation, and I think everyone can benefit from that. There are areas that are much more sensitive when it comes to technology and chips and semiconductors. But even there, I would say that it's important for all investors, for all business investors, for governments, for policymakers, to at least understand what's happening in China. Because I think it's relevant. It has an impact on global outlook. You look at EVs, you look at the solar industry, you look at what's happening in battery storage.

• 40:49Speaker 03

  Having access to that sort of know-how ultimately is going to be important for everyone. How you do that in a way that protects your national interests is a topic of the day for policymakers globally in the US and Europe. And I think people are looking at that differently than they used to in terms of how much they're willing to outsource versus how much they want to do themselves. I mean, this Scale Up Europe fund that I just mentioned is also a policy response to wanting to create homegrown innovation and scale homegrown innovation, which makes sense, the way the US wants to do that and the way that China wants to do that.

• 41:20Speaker 03

  I think that the Chinese economy, it's truly impressive what's happening there in terms of innovation, the way the economy is growing and the amount of R and D, if you look at the patents being filed, the level of innovation, how the innovation is being commercialized. But at the same time, there's some very exciting things happening in Europe and in the United States. Obviously, the US is also leading in many ways when it comes to AI. One of the things to keep an eye on, by the way, is the cost of compute differential between the US and China. There is a big difference there in how compute is generated and ultimately the cost of

• 42:02Speaker 03

  that compute per token to the users, which is going to become more of a focus, I think, going forward, and it has been up until now where it's kind of been viewed as a must-have, almost free, available to all employees. There will be more focus on ROI, and I think this is where, you know, people are going to start looking at the competitive position of cost of compute in different markets versus what's happening in the US.

• 42:23Barry Ritholtz?

  Last question of EQT before we start talking a little more about the environment out there today. How do investors in EQT manage their exposure? Are they putting money into one fund that has a little bit of everything? Or do people get very granular or a little bit of both?

• 42:44Speaker 03

  We have 30 different strategies at EQT across four different areas: private equity, infrastructure, real estate, and secondaries. Secondaries is our newest area that we've just announced that we've acquired, call it a capital, hasn't closed yet, but we're in the process of bringing that on board. So we have 30 different strategies. I think we have both. We have the drawdown funds, which are the main institutional vehicles for committing, traditionally as you would, to a fund and invest in buyouts or in growth capital or in life sciences or in real estate. But increasingly, and this is the highest growth part of our business and for the industry as a whole, we have the open-ended structures. Some people call them evergreens.

• 43:28Speaker 03

  We don't call them semi-liquids because they're not liquid, they're not even semi-liquid, but they're open-ended. And what open-ended means is that you can subscribe to them every month and you can redeem every quarter, subject to, you know, the underlying liquidity availability in the quarter. And what we're starting to see is There are a couple of advantages of the evergreen or open-ended structures. Number one, they do invest across everything, so you don't have to choose which funds you want to invest in, you get a broad exposure. Number two, they invest 100% of your money immediately into the asset class. So we're starting to see institutional investors also use this, not just the private clients that use this, because they are able to dial up and dial down their exposure instantly.

• 44:13Speaker 03

  So if you want to have a certain percent of your portfolio in private markets, rather than waiting for the capital to be called over the next two, three years, you could just put it to work immediately into the asset class through these evergreen structures, which are fully invested on an NAV basis immediately. So that's one of the interesting aspects of that. The other interesting aspect of our evergreen structures or open-ended structures is, unlike some of the other products out there, which have designated investment strategies or investment teams for those open-ended structures, our open-ended structure is essentially a like-for-like, pari passu alongside everything we do. You get exactly the same exposure to exactly the same deals and the same pricing and the same everything that we provide to our sovereign wealth fund clients, that we provide to our institutional clients.

• 44:58Speaker 03

  It's all allocated across equally. So there's no cherry picking, there's no sort of different strategies for the wealth vehicle as there is for the institutional vehicle. It's a single vehicle. And then I think the other key aspect of our investment program, which is sort of where, why we've landed where we've landed in terms of our fundraising last year, we've, for example, we've just announced our closing of our Asia fund, which is a $15 billion fund. It's the largest fund ever raised in Asia, $15.6 billion. The reason we've been able to achieve this is because of our exits and liquidity profile of our investment program. It's been a tough environment for exit liquidity. It's one of the challenges that you read a lot about in our industry. We actually had a record year for exits last year at EQT.

• 45:40Barry Ritholtz?

  Forty billion dollars?

• 45:41Speaker 03

  Forty billion dollars. We had $40 billion in distributions.

• 45:44Barry Ritholtz?

  That's huge.

• 45:46Speaker 03

  It's huge.

• 45:47Barry Ritholtz?

  More than 10% of total invested dollars. That's tremendous.

• 45:52Speaker 03

  It's actually about 30% of the NAV of the strategies that covers. And if you look at active funds. And if you if you look at the liquidity profile there, it even included a significant amount of tapping into the equity capital markets, the public markets. So we were actually the number one ECM firm last year. We had $15 billion of equity capital markets activity, ranked number one by far, actually, relative to all the other private equity firms out there, on the back of just having some really interesting assets that the market was open for.

• 46:26Barry Ritholtz?

  Meaning, when you have a liquidity event, that money just doesn't sit in bonds, you put it actively into equity markets?

• 46:34Speaker 03

  No, meaning that we're able to take our companies public or sell down through the public markets as an avenue of getting liquidity versus just trying to sell to other buyout funds or sell to strategic buyers. Those deals have been a bit slower, and even the IPO markets have been challenging. But we were, within a challenging IPO market, we had the highest level of activity of all other market participants.

• 46:55Barry Ritholtz?

  It's amazing. My bias is not thinking IPO because of what we've seen the past five years, but thinking some exit, and then just park the cash there. I have it exactly backwards. You exit through the IPO market and then you distribute the cash to LPs.

• 47:13Speaker 03

  Exactly. Our biggest exit last year globally as a group was a company called Galderma, which is a European medical aesthetics business, providing medical aesthetic products, including things like Botox, that have been on the rise and completely uncorrelated to AI dislocation, and an investment that did extremely well for us. In total, over the last two or three years since we took it public, we've realized something like $24 billion of distributions from that single investment. Last year alone, we sold over $8 billion in one single tranche, which was the largest transaction ever completed in the public markets by a private equity firm. So the point of all this is just really to

• 47:57Speaker 03

  say that in a tough market where liquidity, where people are looking for distributions, it's nice to be diversified globally where you're not tying all your liquidity proceeds to a single Strategy or a single market, but you have exposure to multiple markets and you're getting cash back from different strategies to give you that cash that you need at a time when you're lacking distributions from other parts of your portfolio.

• 48:20Barry Ritholtz?

  Really fascinating. Coming up, we continue our conversation with Jean Eric Salata, chairman of EQT Group, discussing the combination of BPEA and EQT. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.

• 48:51Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Businessweek's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 49:33Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.

• 50:17Barry Ritholtz?

  I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Jean Eric Salata. He is Chair of EQT Group, one of the largest alternative managers outside of the US. They manage $316 billion. So let's talk a little bit about the state of alternatives and markets in the current environment. You mentioned artificial intelligence, energy transition, healthcare digitalization. What has you most excited in Asia over the coming decade?

• 50:53Speaker 03

  I think in Asia, as we were touching on a little earlier, there's a couple of big themes that we're excited about. One is this sort of capex supercycle, which is feeding through the Asian supply chain. You know, when you're talking about building data centers or semiconductor memory chips and so on, there's a whole supply chain that feeds into that, whether it's the cooling, whether it's the grid, whether it's the capital and equipment that's used to manufacture, the testing equipment, the services around that. So there is a whole supply chain that's seeing elevated activity and growth. I think the number is something like an incremental

• 51:34Speaker 03

  $5 trillion of capex being spent in Asia within the industrial supply chain between now and the next, over the next five years. It's growing at about 15% a year. So you've got a healthy growth, tremendous capex spend. It's a little bit of the picks and shovels approach to you have this tremendous boom in AI that, you know, that's feeding through. There's knock-on effects into the supply chain, and Asia's pretty well positioned to participate in that. You look at markets like Korea, you look at markets like Japan, those are probably two of the biggest beneficiaries, certain parts of Southeast Asia as well. So we're excited about that. I think the second big opportunity, we touched on it earlier as well, is just

• 52:15Speaker 03

  the Japanese buyout market and, you know, the, the level of reform that you're seeing there, driving increased deal flow, driving really what I call the excess returns opportunities that private equity really is, is good at and should be focusing on. The, the days of, you know, buying under managed assets.

• 52:38Speaker 03

  Either changing the management or enhancing the strategy of the business in order to to close the gap between the operating performance of the business and the full potential of the business. That's kind of the traditional playbook of private equity. It's gotten harder to do in parts of the market that have become more efficient. Globally, you have a lot of shareholder activism already. So most public companies are already doing what they should be doing. But in Japan, they're a little bit still further behind. And now you see a big push by the Japanese authorities and political leadership to drive efficiency in their economy and to drive corporate governance reforms, which is trying to close this gap between full potential and performance. And as a result, there are a lot more assets being sold, either corporate divestitures, take privates,

• 53:23Speaker 03

  or generational change happening with founder-led businesses, where you're buying business and you really see the opportunity to simplify and improve execution. It's really about that. It's about sort of like focusing the business in fewer areas and then improving execution on management.

• 53:41Barry Ritholtz?

  Let's talk about energy transition. It feels like here in the United States, we're sort of backing away from a lot of alternatives. Asia seems to be full speed ahead. What are you seeing as opportunities in that space and where?

• 53:56Speaker 03

  Yeah, we see a lot of opportunities across both Europe and Asia in the energy transition. It's, you know, with what's going on now in the Middle East as well, it's kind of driving home the point that energy security is going to be even more critical in the future. There is a tremendous technological push of innovation coming out of China in terms of supply chain for batteries, for solar, even areas like hydrogen. You're starting to see a lot of very interesting scaled up innovation there. We have a big infrastructure business in Asia that invests in the energy transition. We invest in battery storage, for example. We have a big business in Australia now.

• 54:38Speaker 03

  Australia is big in this area. We expect to see more opportunities there. Singapore has been a leader actually in funding the energy transition throughout Southeast Asia. Very forward-thinking, I would say, in that regard. And it's just a large investment opportunity that ultimately with with energy transition, with climate-related concerns, you know, the real catalyst here is ultimately going to be, is already having to be the market forces that drive this forward. It has to be that it's more cost competitive, it's more cost-effective to do things using electricity and the grid than it is using fossil fuels. Otherwise, if it's not more cost-effective, the market forces aren't really at play,

• 55:23Speaker 03

  and you're relying on policy or you're relying on philanthropy, it's just harder to see these things scale. But we're getting to this tipping point where the cost curves are coming down, the security concerns are becoming real. And when that happens, then, you know, with scale, with volumes, whether it's EV batteries, whether it's solar panels, you're starting to see the big uptake and the movement in that direction.

• 55:46Barry Ritholtz?

  We're getting a sense in the United States that the war in Iran and the shunning of the Strait of Hormuz is paradoxically accelerating the move away from gas, oil, crude, coal even, towards alternatives. What's the perspective like from Asia?

• 56:05Speaker 03

  I would agree with that. I think that the energy security is top of mind. And certainly China has moved very much in this direction. They have the largest installed base of renewable energy. They're the largest investor in renewable energy globally, and they're moving in that direction, probably mainly for energy security reasons as well as global competitiveness reasons. And then eventually it also is going to come, I mean, there is still multi-decade run in fossil fuels for sure that's going to play out. But ultimately, there's going to be. Be a cost issue related to fossil fuels and if you want to be competitive as an economy, what's your cost of energy? You know, and it is a scarce resource if the cost of energy is going higher and higher

• 56:51Speaker 03

  versus the other alternatives out there. If you haven't invested in that you're playing catch up, it will feed through to the rest of the industrial base. And I think this is where it's important to take a longer term perspective and where private equity can play a role in sort of thinking through the next five, 10 years. How do you make companies more competitive? How do you drive innovation? How do you drive investment in energy competitiveness and the energy transition to help this happen?

• 57:14Barry Ritholtz?

  We haven't really talked about India, which has always felt like it was, oh, two years away. This is really going to be the next powerhouse economy, always feels like it's on the verge. What are you seeing there? It kind of feels like one of the more compelling growth stories.

• 57:33Speaker 03

  I think I like India a lot. We're very bullish on India. It's been the biggest market for us over the last five years of where we've invested. Historically, the story's been a lot about technology investments in the tech services industry primarily, which has been a beneficiary of global investment in technology and the tech stack and the migration to the cloud. That has hit a little bit of a disruption now with what's going on with AI, but they're quickly adapting to it and using AI tools to actually make enterprises more competitive and to help diffuse AI into the enterprise using the skills and they have, you know, millions of computer technology programmers and labor available to help drive AI adoption,

• 58:16Speaker 03

  which is one of the things that India is very competitive in. But the bigger story in India, I think, for the next five years is more about the consumer and the growth in the middle class. And one of the big beneficiaries of the growing middle class, as you're now seeing a huge increase now in, you know, it's the largest population in the world, 1.4 billion people. It's also the youngest population in the world, so the demographics are very favorable. And one of the big early beneficiaries that we're starting to see on the ground in India is the healthcare sector, housing and healthcare. You know, the first thing that people do when they start to save and generate a good income, they buy a home. And then they want to make sure their families well looked after, their parents and their children well looked after from a healthcare standpoint.

• 58:59Speaker 03

  So we're seeing strong demand for housing, housing finance and for healthcare, which are some of the areas that we're investing in, in India.

• 59:07Barry Ritholtz?

  So I'm going to paraphrase a quote of yours. Talent is the key to unlocking outsized returns in private equity. You're looking at India, you're looking at China, Japan, Korea, Europe and the United States. How do you find and develop management teams in such a broad, diverse selection of regions? That sounds like that is its own specific challenge.

• 59:33Speaker 03

  It is, and I think one of the things that we've learned over the years is the importance of being able to be what we call an active owner in the businesses that we buy, which has really meant that we've really migrated primarily to a controlled buyout strategy, other than in our early-stage tech strategies. But in our main strategies, we're a buyout investor, which means we have control. And I think having control enables you to really affect change in the business and collapses this sort of agency problem that you see between ownership and management in many other markets around the world, and Asia is no exception. We're starting to collapse that and see that collapse in Asia through the ownership model that, the governance model really, that private equity brings when they invest, when we invest as an industry.

• 1:00:17Speaker 03

  And as a result, as we've scaled our business over time, you're starting to be able to really develop pools of talent. So for example, we have seven, eight hundred what we call industrial advisors across, globally across EQT, from different industrial sectors and different sectors that we invest in. And we tap into those to come and become what we call our non-executive chairs or independent non-executive chairman. So we have a chairman that we bring in from industry. We usually have a CEO, either existing CEO or new CEO, and then we have our deal partner. And that combination of those three people is the governance structure for our investments that drive the active ownership model for our business. We also are seeing a bigger pool of domestic talent now that we're able to develop within, say, Japan, within India, through multiple private equity

• 1:01:03Speaker 03

  Back investments that we've made where you know the same CEO, for example, that we work with before. We can work with that same individual again because the model now has been tried and tested. And been around for a couple of decades. So you're developing much deeper bench of talent in private equity. In Asia than you've had in the past. And that's been, I think, a key driver of returns, the combination of governance. Through the buyout strategy plus the talent pool that's available now.

• 1:01:30Barry Ritholtz?

  I have one last question before we get to our favorites that we ask all our guests. What do you think investors are not either talking about or thinking about? But should be when it comes to private equity, different geographies, different regulatory policy changes. What what is getting either undernoticed or overlooked, but shouldn't?

• 1:01:53Speaker 03

  I think one of the really interesting developments is what's happening in the convergence between. But public and private markets, so companies staying private longer. And the sort of blurring of the lines there, how you get exposure if you're an investor to the best businesses in the world. Do you wait till they become public or do you do it before they become public? You know, historically, it was a very small minority of institutional investors, really, that got exposure to private markets. Individual investors almost had zero. That's changed a lot in the last few years, but it's going to change, I think, even more. As we move into the coming years and people start to participate more. The democratization of our asset class that people talk about, I think, is a big trend. Related to that is the kind of blurring of the lines between or convergence between.

• 1:02:38Speaker 03

  The secondary market and the primary market of private equity. You know, those used to be viewed as completely different things. You invest in a private equity fund. If you can't get your money back after seven or eight years, you find someone to buy those interests from you and that's a secondary market. That has changed. If you think about the public markets. When you invest in a stock, you're buying a secondary position. You're buying, when you buy Apple's stock today, you're buying from someone who's selling it to you, you're buying a secondary. You're not buying the IPO of Apple. That was a primary that happened 25 years ago. Same thing's happened in private equity is that, you know, all the companies that are. Private in order to buy them, you had to buy them as a primary through a fund that bought the company as a private deal.

• 1:03:20Speaker 03

  Well, now we have 3.8 trillion dollars of private companies out there that are unrealized that everybody is complaining about. That actually is the foundation of a secondary market now in private companies, private assets that you and I and others can start to participate in through the secondary market. You don't need to find a new deal to buy. You can buy an existing business that's privately owned if you like it, if it's got great return potential, if it's the right price. It's another way to get exposure to the asset class through these evergreen structures, for example, and particularly through the credit, through the secondary markets structures, which is the way a lot of institutional investors are starting to think about it.

• 1:04:00Speaker 03

  If I want to dial up or dial down my exposure to private markets, I can use secondary structures. I don't need to invest in a private equity fund per se. I can do that through the secondary markets.

• 1:04:11Barry Ritholtz?

  So let's jump to our speed round, starting with who are your early mentors who helped shape your career?

• 1:04:17Speaker 03

  I was very lucky. I had a third grade teacher that kind of took an interest in me and kept me after school to help me work on independent projects and was like an outlet for my creativity that I felt was frustrated in class. Really amazing teacher.

• 1:04:32Barry Ritholtz?

  Let's talk about books. What are some of your favorites? What are you reading currently?

• 1:04:35Speaker 03

  I read a great book called Why the West Rules For Now, which is a sweeping history of why the industrial revolution happened in the West and not in Asia and the East. But it talks about how going forward that could change. And if anybody's interested in history, I highly recommend that book.

• 1:04:52Barry Ritholtz?

  Really, really good. Final two questions. What sort of advice would you give a recent college grad interested in a career in either investing or private equity?

• 1:05:02Speaker 03

  Two things I would say. One is you need to be AI native these days, which was not the case, obviously, when I was starting out. And secondly, perseverance. Don't give up. Stay in the game because things come and go. You get knocked down, get back up, you stay in the game and new opportunities arise.

• 1:05:19Barry Ritholtz?

  Final question. What do you know about the world of private equity, private real estate, credit, infrastructure, alternatives today? Might have been useful back in the 90s when you were really getting your legs under you.

• 1:05:33Speaker 03

  The so-called eighth wonder of the world, which is the power of compounding. If I wish I'd appreciated that a bit more after 30 years of investing. If you let something ride for 30 years, generally, if it's a decent business, it'll be worth a lot of money.

• 1:05:46Barry Ritholtz?

  Jean Eric, this has been absolutely fascinating. Thank you for being so generous with your time. We have been speaking with Jean Eric Salata, Chair of the EQT Group. If you enjoy this conversation, well, check out any of the 640 we've done over the previous 14 years. You can find those at iTunes, Spotify, Bloomberg YouTube, wherever you get your favorite podcasts. I would be remiss if I didn't thank the crack team that helps with these conversations together each week. Alexis Noriega is my video producer. Sean Russo is my researcher. Anna Luke is our producer. I'm Barry Ritholtz. You've been listening to Masters in Business on Bloomberg Radio.

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