Jean Eric Salata: Find the Comeback in the Setback

**SPEAKER_1** (0:00)
For Morgan Stanley, this is Hard Lessons, where iconic investors reveal the critical moments that have shaped who they are today. You'll hear about two out of consensus calls, one that was on the money, and one that wasn't.

**Jean Salata** (0:12)
The easy thing to have done at that time would have been to say, you know what, this is too difficult, this market doesn't work for us, we don't know how to operate here.

**SPEAKER_1** (0:20)
Today on the show, Jean Salata, chair of EQT Group, with $316 billion in assets under management.

**Jean Salata** (0:27)
I've sort of always viewed myself and our business as a little bit of an underdog.

**SPEAKER_1** (0:31)
Jean founded Bearing Private Equity Asia in 1997 and led the management buyout that established BPEA as an independent firm. In 2022, BPEA merged with EQT to create one of the world's largest global private markets firms, which today spans the US, Europe and Asia.

**Jean Salata** (0:49)
People talk about the beginning of your firm and they look at where you've ended up and they say, wow, haven't they been so successful? But there were so many times when it could have easily gone the other way.

**SPEAKER_1** (0:58)
He sat down with Mo Assomull, global co-head of investment banking at Morgan Stanley. They met at the Campbell, inside Grand Central Terminal.

**Mo Assomull** (1:05)
Thanks for joining us. Lots to get through today.

**Jean Salata** (1:08)
Great to be here. Thanks for having me.

**SPEAKER_1** (1:10)
Mo began by asking Jean about the arc of his career.

**Mo Assomull** (1:16)
You started out building a small private equity business within a larger organization, Bearings Bank, of course. You're obviously our chairman now of one of the largest publicly traded private equity firms. How does that shape your career?

**Jean Salata** (1:30)
Yeah, when we started off, actually, we had only $25 million of assets under management. But in the midst of that, just when we were getting going, the Bearings Bank actually went under. And that was really one of my first sort of setbacks or shocks in my private equity career was being part of an organization that was going through a pretty tumultuous period. But in hindsight, as you're living through it, you don't appreciate these things, but in hindsight, really, this sort of mini crisis opened up opportunities for us to eventually spin our business out, which is what ended up happening when Bearings was acquired by ING, and then we negotiated with ING to spin the Asia business out.
And that's sort of a recurring theme in my career, that when there's been these big dislocations or some of these setbacks and crises, there's always also been another door that's opened or that's created a new set of opportunities, provided you're able to survive the setbacks and navigate through the difficult periods that you're going through. But the business grew, it developed, and we went from being a much more focused business around a few geographies to being a much more dispersed business around multiple geographies. And then we got to the stage where we were a fairly established large firm in Asia, and I started noticing some of the global firms changing the way they did business in our industry, moving from being just a single product, single fund focused partnership to being multi-product, larger institutionalized businesses, multi-strategies, operating across geographies globally, and also having just much more scale.
And that's when we started to really institutionalize our business, we started to put in a lot more processes and changes to our leadership structure so it wasn't so much centered around me as a founder, and became much more of a distributed organization. And that really set us up for ultimately what we ended up doing was becoming part of a much larger global platform. And I was lucky enough to meet the folks at EQT who had a very strong business in Europe and the US, but really didn't have much of a presence in Asia. So it was a perfect strategic fit, but it was also importantly a really good cultural fit, which is ultimately why the combination succeeded.

**Mo Assomull** (3:33)
That's great.
So I'd love to understand some of your investment calls over the past couple of decades. Maybe you could start with one that was a particularly successful one before we get into the ones that are more challenging.

**Jean Salata** (3:45)
The one that comes to mind is a for-profit education company called North Anglia Education. North Anglia Education is an operator of international schools around the world. Today it's actually the largest in the world. But at the time, which was around 2007, 2008, it was an industry that actually was on the radar of investors in the United States, but was not on the radar at all in Asia. And I had a very close friend working at a firm in the United States that was helping diligence a lot of private for-profit education companies, for-private equity firms. And I was talking to him about it, and I was thinking, wow, for-profit education. And I remember even discussing with some of our investors at the time, and they felt like, are you sure you can even invest in the education sector in Asia? Is it even allowed? What are the regulations? How do you generate profit? I started learning more about this, and we started looking. And one of the things we always try to do at Baring Private Equity back in the day and still at EQT is rather than wait for deals to come to us, is think about how we can find things that are not yet in the market, take private opportunities or companies that are privately owned by families.