EQT plans to allocate about 20% of its latest EUR 21.5bn flagship infrastructure fund to Asia Pacific (APAC), a senior official told Infralogic.

EQT Infrastructure VI, which launched in 2022, closed at its hard-cap last week. The value-add fund is so far less than 50% committed, of which 10% of the total fund is in APAC, said Ken Wong, Partner and Head of Asia Pacific, Infrastructure at EQT.

Within the region, the fund has so far made two investments in South Korea – digital security infrastructure provider SK Shieldus and waste recycling business Rena (formerly KJ Environment).

The latest flagship vehicle will target Australia, Japan, and India, said Wong, adding the total number of APAC deals will be in the mid-single digits.

Around 10%-15% of EQT’s global infrastructure funds has historically been invested in Asia. Besides APAC, the new vehicle’s deployment will be roughly split 40:40 between the US and Europe.

EQT Infrastructure VI is expected to write average cheques at close to EUR 1bn globally. Although EQT invested over USD 1bn in South Korea’s SK Shieldus, it views EUR 750m as the sweetspot for APAC, said Wong.

“We’re cognisant that APAC’s deals may not be as large as in the US or Europe, but some deals are platform deals which require capital post-initial investment,” he said.

EQT uses a platform mindset for opportunities including energy transition.

The manager committed around EUR 500m to O2 Power, an Indian renewables developer and EQT’s first APAC infrastructure investment. During a five-year holding period, the platform secured 4.7 GW capacity, growing from four employees to over 400 staff, said Wong. EQT held a 51% stake in O2 Power, while Singapore’s Temasek owned 49%.

Last December, O2 Power was sold to JSW Neo Energy for USD 1.5bn. The platform booked a run-rate EBITDA of nearly USD 450m upon exit, said Wong.

Energy transition, digital, transport & logistics

Looking ahead, EQT Infrastructure VI will consider opportunities across renewables, batteries, and decentralised grids in markets including South Korea, Japan, and Australia, he said.

Digital is another major theme. The fund has earmarked a commitment to EdgeConnex, its data centre portfolio company, said Wong, adding that APAC will pocket a “big part” of that.

Virginia-headquartered EdgeConnex, which did not operate in Asia until after EQT’s acquisition in 2020, has since entered mainland China, Indonesia, India, Japan, Malaysia, and the Philippines. It will continue to expand globally and is actively exploring Southeast Asia, Wong said.

Thirdly, the fund will focus on transport and logistics, with cold storage facilities in developed Asia being particularly interesting, said Wong. “Deglobalisation trends mean local supply chains will need to be strengthened, and that creates opportunities around the movement of goods,” he said.

EQT Infrastructure Fund VI targets returns in line with the manager’s Annual Sustainability Report 2024. Funds in EQT’s Value-Add series have delivered 15% net IRR and 2.5x realised gross multiple on invested capital.

Within APAC, EQT operates from offices in Australia, Hong Kong, India, South Korea, mainland China, Singapore, and Japan.

[Editor’s note: The article has been amended post-publication to note that EQT’s overall investment in SK Shieldus was over USD 1bn.]