S’pore led private equity investment rebound in Southeast Asia in 2021: report
SINGAPORE – Singapore had another strong year for private equity (PE) deals in 2021, as the rest of Southeast Asia also emerged from the Covid-19-induced lull in 2020, according to a report by global consultant Bain & Company.
However, even if fundamental growth in Singapore and the region remains intact, some slowdown in private equity activity is likely this year amid deteriorating market and macroeconomic conditions around the world, according to findings. of Bain & Co’s 2022 Annual Southeast Asia Private Equity Report. , published on Tuesday, May 10. The report surveyed over 100 private equity firms in the Asia-Pacific region.
In what the firm called the most impressive turnaround ever, the total value of private equity deals in Southeast Asia hit a record high of US$25 billion (US$34.7 billion). Singapore dollars), more than double the 2020 figure of US$9 billion. This rebound was driven by the gradual easing of Covid-19 restrictions in the second half of 2021, according to the report.
Singapore leads the region in both the number of transactions and their value. It recorded 104 deals with a total value of $12.1 billion, up from 54 and $6.2 billion a year earlier.
Republic was also ahead on exit value – the amount investors make when they sell their private equity stakes – with the total hitting $7.1 billion last year, up from just 1.3 billion dollars in 2020.
However, the dominance in transaction and exit values came mainly from the extraordinarily large equity listing of Singaporean ride-sharing and e-commerce giant Grab in New York. Additionally, Singapore’s hub status means that many companies are headquartered in the country and therefore investments in these companies are counted here, even though they might have significant operations elsewhere.
Indonesia and Vietnam were Singapore’s closest competitors in all categories, according to the report.
Mr. Usman Akhtar, Partner and Head of the firm’s Southeast Asia PE Practice, said: “Southeast Asia as a region has rebounded strongly from the Covid-19 impacted year 2020. , the level of activity in 2021 showing that investors were keen to make up for lost time.
“While private equity investors continue to believe they can achieve strong returns in the region over the next three to five years, we are also seeing them place more emphasis on top line growth and operational improvements as multiple expansion expectations become relatively subdued.”
Mr. Akhtar said soaring inflation, worries about a recession in the United States and recent fluctuations in the capital market will likely make most investors worried about the outlook for revenues, earnings and valuations, especially for growing businesses such as internet and technology. sector.
The sector has accounted for the lion’s share of deal volume and value across the Asia-Pacific private equity landscape in recent years.
“In Southeast Asia, the digital economy continues to grow as technology-driven investments remain dominant in Indonesia and lead growth in Singapore and Vietnam,” Bain & Co said.
Still, according to the report, sectors like healthcare and financial services are starting to take a noticeable share as investment targets.
The report’s findings showed that despite a challenging market and economic environment, most private equity firms believe that Southeast Asia continues to offer investment appeal due to of its young, large and rapidly digitizing population.