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Press release

Southeast Asia private equity market hits record deal value of $25 billion in 2021 rebounding from sharp 2020 decline

Southeast Asia private equity market hits record deal value of $25 billion in 2021 rebounding from sharp 2020 decline

Investors remain cautious but optimistic amidst the mixed public market movements for SEA tech giants and ESG becomes a driving theme in investment strategy

  • 10.05.2022
  • min read

Press release

Southeast Asia private equity market hits record deal value of $25 billion in 2021 rebounding from sharp 2020 decline

Singapore – May 10, 2022 – The Southeast Asia Private Equity market had one of the most impressive turnarounds in its history, with deal value reaching an all-time record high of $25 billion, which more than doubled the 2020 figures. The previous year had seen a significant slowdown, with the market recording the largest fall across all APAC markets due to travel restrictions hampering deal-making and diligence processes, but the progressive “opening-up” of countries in the second half of 2021 helped drive a rebound in deal value. These are among the findings from Bain & Company’s 2022 annual Southeast Asia Private Equity Report, released today.

“Southeast Asia as a region has bounced back strongly from the Covid-19 impacted year in 2020, with the 2021 activity level showing that investors were keen to make up for lost time.” said Usman Akhtar, Partner and Head of Bain & Company’s Southeast Asia Private Equity Practice. “While PE investors continue to believe they can get strong returns in the region over the next 3-5 years, we also see them putting more emphasis on topline growth and operational improvements as expectations of multiple expansion become relatively muted.”

Asia Pacific now makes up over a quarter of the global PE market and in 2021, surging investor confidence in Southeast Asia resulted in the largest growth in deal volume of any country in APAC and was only behind Japan in deal value growth. Five megadeals accounted for 33% of total deal value, which grew 143% compared with 2020. The influx of capital from e-commerce, logistics and technology deals meant that Singapore, Indonesia and Vietnam saw a strong jump in their share of deal value and count, with further potential to climb moving forward, given the presence of sought-after tech companies and vibrant start-up economy in these markets. Additionally, growth and early-stage investments deals grew significantly in 2021; growth deals remained the dominant deal type and made up 77% of Southeast Asia’s deal value. Overall deal multiples in the region dipped slightly in 2021 compared to 2020 but were in line with levels seen in from 2018-2020.

Exit value in Southeast Asia more than doubled what it was in 2020, though it still is not at full potential it remains below the average from 2016-2020. Much of the growth was driven by Singapore, particularly as maturing tech companies such as Grab debuted in the public markets.

While fundraising picked up slightly compared to 2020, Southeast Asia-specific fundraising remained muted, amid a shift to broader pan-APAC funds.

As in years past, the Internet and Technology sectors accounted for the lion’s share of deal volume and value across the larger Asia Pacific PE landscape. Within Southeast Asia, the digital economy continues to roar ahead as tech-centric investment remains to be dominant in Indonesia (~60% of deal count) and leads growth in both Singapore (~50% of deal count) and Vietnam (~55 of deal count%). Hot sectors like healthcare and financial services are beginning to take noticeable share as investing targets, representing 18% and 9% of deal count respectively.

“Investors globally and especially in Southeast Asia are rightly concerned about finding the right opportunities to invest in amid the increased competition from global and local funds.” said Suvir Varma, Senior Advisor to Bain & Company Global Private Equity Practice. “Given the competitive intensity, funds would do well to have defined themes around which they wish to deploy capital, a clear investment thesis for each asset, and a prepared action plan to intervene should the macro conditions turn against them.”

3 Key Themes in 2022

  1. Robust secular fundamentals. Southeast Asia continues to offer investment appeal by virtue of its young, large, and rapidly digitizing population. 60% of GPs remain favorable on regional markets and on future driven expectations especially as the region looks primed for even further post-Covid-19 recovery and can expect to capitalize on a 40 million working population by 2030.
  2. The great “re-rating”. 2021 saw some high-profile first-generation unicorns firm up their plans to go public. However, several of Southeast Asia’s tech giants have been affected by the global hit to high-growth tech stocks. In the short-term, there could well be caution exercised by investors, who will aim to ensure they calibrate valuation expectations on private market tech investments to reflect the current environment.
  3. ESG is here to stay. Environmental, Social, and Corporate Governance (ESG) has shifted from a niche consideration to a top priority. The overwhelming majority of PE funds (over 90%) surveyed expects to increase efforts and focus on sustainability and ESG in the coming 3-5 years, with more than half of the assets they diligence including an ESG component. Across the spectrum of sustainability topics, the top three ESG investment themes are clean energy, safe, fair & inclusive communities and sustainable food & health according to survey results.

Finally, other trends in the region which are seeing increased and strong investment interest are in digital assets (crypto and NFTs etc) and consumer products due to a post-Covid-19 consumption rebound. Digital healthcare is also poised for significant growth with ample headroom for opportunities.

“The economic growth that could be added to Southeast Asia from a number of exciting sectors is still substantial.” said Tom Kidd, Partner in Bain & Company’s Southeast Asia Private Equity Practice. “While firms are understandably eager to capture these next waves of growth, long-term success will be achieved by those who pay more attention to their core investment themes and diligence, particularly in ESG integration as increasing pressures for businesses to take steps in climate action, diversity, equity and inclusion has caused a definite and enduring shift in the industry’s investment approach.”


Editor’s note: To arrange a copy of the report or an interview with the authors, please contact Nicholas Worley at nicholas.worley@bain.com or +852 2978 8830.

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