Southeast Asia saw a total of 22 private equity (PE) deals deploying US$3.9 billion ($5.26 billion) in 2023, down from the 38 deals deploying US$6.7 billion in the preceding year, according to the “EY Quarterly Private Equity Update: Asean (2023)” report.
Health care deals accounted for more than a third (36%) of PE investments in Southeast Asia, followed by telecommunications and digital infrastructure (31%) and business services (15%).
The region also saw 13 PE-backed exits in 2023, valued at US$3.3 billion.
The slowdown in the pace of PE activity in Southeast Asia is similar to the trend seen across Asia Pacific, where the number of funds closed in 2023 — 71 funds raising US$35 billion of capital — was the lowest since 2018. Overall, there were 99 PE investments in Asia Pacific last year, deploying US$79.3 billion.
EY Asia Pacific private equity leader Luke Pais says the slower year for fundraising and exits in 2023 are somewhat linked, as a slower return of capital to limited partners resulted in a lower level of commitment to new funds raised. To navigate this period of dislocation, investors should look into investing in good assets at attractive valuations to emerge from the current downturn stronger than before, he adds.
EY expects to see higher exit activity in 2024, with secondaries being a popular exit choice. “Looking ahead into 2024, sectors such as consumer, health care, education and business services will likely see more activities,” says Pais.
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The firm believes Southeast Asia’s PE landscape in 2024 will be led by the following themes — technology and artificial intelligence; transition to a low carbon economy; aspirational consumer, fragmented business service landscape; and reshaping of the global manufacturing landscape.
