General partners running private equity firms in the Asia-Pacific region are most concerned about high valuations, intensifying competition and the disruption caused by COVID-19, according to a study by the consultancy, Bain & Co. 

Deal values rose across Asia last year as investors piled back into the fray after the early-2020 hit caused by the pandemic. Deal value reached a record high of $185 billion, rising by 19 per cent from 2019 and 23 per cent over the previous five-year average, the firm said. Bain spoke to 162 senior market practitioners. Some 63 per cent of general partners said that higher multiples were one of their top concerns. Some 40 per cent of GPs said valuations rose last year.

“It’s been a rollercoaster year for private equity in Asia,” Kiki Yang, co-head of Bain & Company’s APAC Private Equity practice, said. “But while deal-making ended the year on a high, COVID-19 has not gone away, and building portfolio resilience will be a crucial skill for leading investors.”

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Following a “breathtaking” fall to a 10-year low in 2019, the number of exits was flat last year, it said. Exit deal value totalled $70 billion, down by 24 per cent year-on-year and 40 per cent from the previous five-year average, as PE managers awaited better times fo selling portfolio companies. Of the GPs Bain surveyed, more than 70 per cent said the exit environment was more challenging than in 2019, pointing to COVID-19 as the principal cause for a weak exit environment.