Riding Global Tailwinds with EQT's Jean Eric Salata

26:11One 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 ways of working with others. And that's when I met EQT really through their own IPO that they had done at the time, gone public in 2018, 2019. And I was curious about that. And I saw, 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, it became evident to all of us sitting around the table that actually there's something here that could be quite powerful if we were to come bring the businesses together.

26:54You 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? Yeah, I think initially 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.

27:38So 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. 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.

28:20The European firms already are thinking in terms of, well, every country is different. You've got, you know, 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, a heightened sense of appreciation for the cultural differences within Asia. And 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 and understanding that each country, each region, the cultures really matter.

28:54Then 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 common history, shared history there. And ultimately, it boiled down to the, I'd say, the chemistry of the senior team, but then ultimately the culture throughout. And I felt very comfortable with it. And we did spend some time together, meeting with the team members, meeting with each other. And we ended up feeling like this was going to be a great fit.

29:28Still 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. And it really boils down to the fact that the people, the cultural fit was very strong. Maybe a good time to talk about the values also of EQT, which are similar to the values we had at Bearing Private Equity at the time. There's some key values that EQT has. Number one, it's high performing, which is 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 transparency.

30:00We 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. It's not the typical dealmaker, kind of Wall Street type of dealmaker that you get in some of our parts of our industry. And I think that really appealed to the kind of makeup of our firm at the time. having that really informal interaction with people. That's a little bit of a Nordic trait, I would say, that this lack of hierarchy. You take a look at Connie.

30:40He's the founder of the firm. 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 old business, and in a sense diluting even further on a fairly large transaction, as you mentioned, 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 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 partnership prior to that.

31:15Really interesting. Let's talk a little bit about how the capital is invested. 65 % of EQT's capital is in Europe and Asia. How do you think about geographic diversification? It's always a challenge. 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 U.S. assets. Not to say that US assets are not attractive or that they don't have great prospects, which they do. But having 85%, 90 % of your assets tied into a market that's already highly concentrated is becoming a little bit uneasy for people.

32:03So what we're sensing with our clients is a desire to get exposure to more global markets. And where 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. 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.

32:48So kind of series B onwards in areas like quantum computing, AI, life sciences, AI infrastructure, industrial technology, 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 in 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 in that sense.

33:26Really 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 U.S. up until a year or two ago. 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 to some headwinds. They seem to be a little more complex in trying to figure out what direction they're heading. Yeah. I think what we're starting to see globally right now is this capital CapEx super cycle that is playing out with AI infrastructure, but not just AI infrastructure.

34:20It also feeds into the re-industrialization focus on CapEx for reindustrialization. Reindustrialization. Explain what that means. 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 reindustrialization, the AI CapEx infrastructure, plus 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, it's historical, the levels of investment that we're seeing.

35:03And 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. And so this kind of global supply chain of capital expenditures is creating new investment opportunities and demand for capital that 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.

35:42For 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 EdgeConnects. It's active both in the US, but also in Europe. And now increasingly in Asia, we have a joint venture in India, for example, with the Adani Group in EdgeConnects. And 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. In addition to that, we take kind of an end-to-end solutions approach.

36:21So we have the compute, but we also have about$100 billion of investment into energy. So the whole energy grid, power generation and grid and storage. This is a really important part of the comprehensive solution that you need to drive AI compute. 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.

37:05And there, the Japanese buyout market is really on a tear. It's being driven primarily by some corporate reforms around shareholder reforms and activist shareholder, 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, this year alone, it's up 60 % year to date. The total number of activist shareholder campaigns has doubled in the last few years, 50 to over 100 a year on the back of some of these reforms.

37:46So 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, 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. So I have so many questions to go from that. Sorry, maybe just one last point on that, which is that you started the question off by the outperformance of the market.

38:20So what ended up happening last year, as you pointed out, is that And the stock markets, if you look at listed markets as a proxy, the S &P 500 did pretty well. It was up sort of 18 % or something. 17 versus 33 overseas. But everything else in Asia was up much more than that, as it turned out. Korea, amazing. Who would have guessed? Korea was up 60 % last year. And Hong Kong was up. Japan was up in the 30s. And 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.

38:58But the idea of the correlation and concentration and 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. 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. 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?

39:56Yeah. The world is geopolitically is becoming more polarized and maybe creating more silos in certain strategic areas like technology and defense. As you know, as as 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 you know a desire i think to work together i hope in areas like for example in medicine you know if you look at the biopharma the biotech industry there's a lot going on right now between china and the u.s a lot of the early stage trials that are being done many of those are getting acquired by U.S.

40:43pharmaceutical 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.

41:26Having 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 the 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.

41:57I 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 &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 that compute per token to the users, which is going to become more of a focus, I think, going forward than it has been up until now where it's kind of been viewed as a must-have, almost free, available to all employees.

42:51There will be more of a focus on ROI. And I think this is where people are going to start looking at the competitive position of cost of compute in different markets versus what's happening in the US. 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? We have 30 different strategies at EQT across four different areas. Private equity, infrastructure, real estate, and secondaries.

43:32Secondaries is our newest area that we've just announced that we've acquired. Call it capital. It 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.

44:05We don't call them semi-liquids because they're not liquid. They're not even semi-liquid, but they are open-ended. And what open-ended means is that you can subscribe to them every month and you can redeem every quarter subject to the underlying liquidity availability in the quarter. and the uh you know what we're starting to see is there are a couple of advantages of 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 and 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.

44:51So 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 can 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-end 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, alongside everything we do.

45:27You 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. 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, you know, for example, we've just announced our closing of our Asia fund, which is a$15 billion fund.

46:00It'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 and 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. $40 billion? $40 billion. Something like that? We had$40 billion in distributions. That's huge. It's huge. More than 10 % of total invested dollars. That's tremendous. It's actually about 30 % of the NAV, of the strategies that that covers. And if you look at active funds.

46:36And 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. Meaning when you have a liquidity event, that money just doesn't sit in bonds, you put it actively into equity markets. 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.

47:23Those 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. It happens. It's amazing. My bias is not thinking IPO because of what we've seen the past five years, but thinking some exit, oh, 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. 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.

48:14In 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 say that in a tough market 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.

48:58Really fascinating. Coming up, we continue our conversation with Jean-Erik 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.

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52:14He is chair of EQT Group, one of the largest alternative managers outside of the U.S. 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? 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 super cycle, which is feeding through the Asian supply chain. 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.

53:03Whether 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$5 trillion of CapEx being spent in Asia within the industrial supply chain between now and 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 too. You have this tremendous boom in AI that's feeding through.

53:46There's knock-on effects into the supply chain. And Asia is 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 earlier as well is just the Japanese buyout market and 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 good at and should be focusing on. the days of buying under-managed assets, either changing the management or enhancing the strategy of the business in order to close the gap between the operating performance of the business and the full potential of the business.

54:37That'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, or generational change happening with founder-led businesses where you're buying business and you really see the opportunity to simplify and improve execution.

55:21It's really about that. It's about sort of like focusing the business in fewer areas and then improving execution on management. 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? We see a lot of opportunities across both Europe and Asia in the energy transition. What's going on now in the Middle East as well is 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.

56:14You'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. 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 energy transition, with climate-related concerns, the real catalyst here is ultimately going to be – is already having to be the market forces that drive this forward.

56:59It 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 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 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.

57:36We're getting a sense in the United States that the war on 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? 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.

58:19And then eventually it also is going to come. I mean, there is still a multi-decade run in fossil fuels for sure that's going to play out. But ultimately, there's going to be a cost issue related to fossil fuels. And if you want to be competitive as an economy, what's your cost of energy? It is a scarce resource if the cost of energy is going higher and higher 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.

58:55How 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? 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. 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 has 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.

59:42That 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. They have millions of computer technology programmers and labor available to help drive AI adoption, 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, and it's the largest population in the world, 1.4 billion people.

1:00:26It'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 health care sector, housing and health care. 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 health care standpoint. So we're seeing strong demand for housing, housing finance and for health care, which is some of the areas that we're investing in in India.

1:00:57So I'm going to paraphrase a quote of yours. Talent is the key to unlocking outsized returns and private equity. You're looking at India, you're looking in 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. 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 control 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 and 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, the governance model that private equity brings when we invest as an industry.

1:02:06And 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 7, 800, what we call industrial advisors 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.

1:02:42We 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-backed investments that we've made where the same CEO, for example, that we worked 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 a 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 returns, the combination of governance through the buyout strategy plus the talent pool that's available now.

1:03:20I 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 is getting either undernoticed or overlooked, but shouldn't? I think one of the really interesting developments. It's what's happening in the convergence between both 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.

1:03:57Do you wait till they become public or do you do it before they become public? 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 the secondary market and the primary market of private equity.

1:04:31You 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. When you buy Apple stock today, you're buying it 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 things happen in private equity is that 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.

1:05:09Well, now we have$3.8 trillion of private companies out there that are unrealized that everybody's 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.

1:05:50If 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. So let's jump to our speed round, starting with who are your early mentors who helped shape your career? 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. Let's talk about books. What are some of your favorites?

1:06:24What are you reading currently? 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. 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? Two things I would say. One is you need to be AI native these days, which is not the case. obviously, when I was starting out.

1:06:59And 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. 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? The so-called eighth wonder of the world, which is the power of compounding. I wish I'd appreciated that a bit more after 30 years of investing. Let something ride for 30 years. Generally, if it's a decent business, it'll be worth a lot of money.

1:07:36Jean-Erik, this has been absolutely fascinating. Thank you for being so generous with your time. We have been speaking with Jean-Erik 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

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