A person runs along the riverbank with the city skyline in the background in Marina Bay on February 5, 2022 in Singapore.
Suhaimi Abdullah | Nurphoto | Getty Images
The total value of personal equity deals in the Asia-Pacific region last yr fell to its lowest level since 2014, in keeping with consultancy Bain & Company, as fundraising fell to a 10-year low amid slowing growth, high rates of interest and instability of public markets.
However, Japan proved to be an exception as deal value increased 183% in 2023 in comparison with the previous yr, making it the largest private equity market in the Asia-Pacific region for the first time, in keeping with the Bain Private Equity Report released on Monday for 2024 in the Asia-Pacific region.
Japan is a sexy investment due to its deep pool of goal corporations with “significant room to improve performance” and company governance reform pressure on Japan Inc to divest non-core assets, Bain said.
Overall, transaction value in the Asia-Pacific region fell by greater than 23% to $147 billion in comparison with the previous yr. It’s also 35% below the 2018-2022 average – a rate of decline consistent with the global slowdown – and almost 60% below the peak of $359 billion in 2021, Bain said.
Exit numbers fell 26% to $101 billion in 2023 in comparison with the previous yr, with 40% of those coming through initial public offerings. Greater China accounted for 89% of IPO exit value in the Asia-Pacific region, with the overwhelming majority listed in Shanghai and Shenzhen. Excluding the IPO in China, the total exit value in the Asia-Pacific region was USD 65 billion.
“The prospects for 2024 exits remain uncertain, but successful funds are not waiting for markets to recover. They pave the way for sales that achieve target profits by using strategy reviews to highlight the potential value of the deal to buyers,” Lachlan said in an announcement. McMurdo, co-author of the company’s annual report.
“This approach can reduce stocks of aging assets and return cash to limited partners by 2024, even if the overall exit market remains depressed,” he added.
Bain said many leading private equity funds have turned to exploring alternative asset classes similar to mid- to high-yield infrastructure operations, including renewable energy storage, data centers and airports.
Here are some highlights from the report:
- Buyouts accounted for 48% of total deal value in the Asia-Pacific region last yr, exceeding the value of “growth deals” – those involving corporations that grow rapidly and infrequently disrupt industries – for the first time since 2017.
- Despite a shrinking pool of investors, Bain said private equity returns are still more attractive than public markets over five, 10 and 20-year horizons.
Bain said the timing of economic recovery stays unclear, although there have been signs of some improvement late last yr. Once the economic recovery does take hold, breakthrough technologies similar to generative artificial intelligence shall be amongst the latest areas that show “great promise,” Bain added.
Japan, India and Southeast Asia are amongst Asia-Pacific markets which might be viewed favorably for personal equity investment opportunities over the next 12 months, Bain said, citing Preqin’s 2023 investor survey.
