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- Japan Dollar trend makes it the number one trading market in the region for the first time
- Returns remain attractive
- Funds are developing strategies to improve exit value and venturing into alternative asset classes for growth
Singapore, March 24, 2024 /PRNewswire/ — A volatile combination of macroeconomic conditions and uncertainty has slowed the global economy for another year. Asia Pacific Private equity (PE) market.The trading value fell to $147 billionFunding has fallen to its lowest level in a decade, according to Bain & Company. Asia Pacific Private Equity Report 2024 It was released today.
In line with the global industry, transaction values in the region fell 35% from the five-year average, to the lowest annual level since 2014. Transaction volume was 30% lower than the 2018-2022 average.
Economic uncertainty has affected most markets, including: Australia–new zealand, China, Southeast Asia and India, transaction value decreased by 63%, 58%, 47%, and 41%, respectively, compared to the previous five years. All four markets reported a decline in megadeals ( 1 billion dollars) than the previous year. South Korea The company’s performance improved slightly as transaction value decreased by 20% compared to the average over the past five years, increasing its share of transaction value in the region.
Japan It was the only market to buck this trend, with transaction value increasing by 183% compared to the average of the previous five years, making it the region’s leading trading market for the first time.Mega deals are the biggest factor Japanese Transaction value skyrockets, increasing transaction value to 30% of total transactions. Asia Pacific The total was up from an average of 7% over the past five years.
“The rest of the Asia Pacific Investors were finding relief after facing fears of slowing economic growth, continued high interest rates, volatile public stock markets and continued geopolitical tensions. Japanese “There is a wealth of target companies with the potential to improve performance, a stable regulatory environment, and persistently low interest rates.” Sebastian Lamyco-head of Bain & Company’s Asia Pacific PE practice and headquartered in Tokyo.
For the first time since 2017, buyouts outnumbered growth deals, accounting for 48% of the total. Asia Pacific Total deal value accounted for 41%, and growth deals accounted for 41%. Part of this change is due to a decline in trading both in the technology sector and in markets traditionally dominated by growth trading. Greater China, India and Southeast Asia.
While the technology sector continues to dominate much of the trade; Asia Pacific, accounting for just 27% of total transactions in 2023, down from the five-year average of 41%. Energy and natural resources was the only sector to record an increase in deal value and number of deals, as PE funds increasingly focus on energy transition-related assets. Advanced manufacturing and services trade value accounted for 26% of the total and was up 8% compared to the five-year average. The main factors behind this increase are: $16 billion Acquisition of Toshiba.
Tough market conditions put some investors on the sidelines in 2023. Asia Pacific decreased by 25% compared to 2022, and the proportion of deal value contributed by the region’s top 20 funds increased to 47%, significantly higher than the past five-year average of 31%. Previously the domain of global general partners (GPs), the composition of the types of investors included in the top 20 fund list has changed as sovereign wealth funds have become more active in larger deals. changed.
The exit plummeted $101 billion, a 26% decrease compared to the past five-year average and a 51% decrease from 2021’s record-breaking levels. Only 22% of general practitioners surveyed by Bain were able to successfully exit as planned, and 30% were unable to exit at all. The difficult macroeconomic environment and the poor performance and unpredictability of the IPO market were the main reasons for the difficult exit environment.
Asia Pacific– Centrally raised funds $100 billion, a 26% decrease compared to 2022 and a 60% decrease compared to the average of the previous five years. Investors raising new funds continued to shift their focus from: Asia.The world share is Asia Pacific・Funds with a focus on private capital fell to 9%, a significant drop from the average of 23% over the past 10 years.
PE returns are a positive sign for 2023, confirming that PE remains an attractive investment class, significantly outperforming public markets over 5-, 10-, and 20-year time horizons. Ta. At year-end, estimated levels of dry powder remained consistently high despite financing difficulties. But around a third of the region’s undeployed capital has been committed over his four years, and GPs are under pressure to deploy it.
To adapt to a challenging market, GPs are changing the way they work. More than two-thirds of GPs said they were increasing their focus on portfolio management, and more than half were working hard on their exit plans.
“Exit outlook for 2024 Asia Pacific Although uncertainty remains high, successful funds are not waiting for the market to recover. They use strategic reviews to highlight the potential value of a deal to buyers, paving the way to sales that achieve target profits. “This approach could help reduce the inventory of aging assets and return cash to limited partners through 2024, even if the overall exit market remains depressed.” Ta. Lachlan McMurdoa partner at Bain & Company and co-author of the report. melbourne.
Bain research shows that despite difficult exit conditions, PE funds that developed pre-sales strategies and compelling equity stories for their portfolio companies were able to attract buyers and successfully exit.
In what has been a turbulent year for PE, many large funds have begun to explore alternative asset classes such as infrastructure and private credit as key sources of growth. Both asset classes have room for growth in the region. Diversification is difficult, but those who do it right build the necessary capabilities and invest close to their core business.
Editor’s note: For more information or to request an interview, please contact: Ang LeeBain & Company, Tel: +65 6228 2960, Email: [email protected]
About Bain & Company
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In 65 cities across 40 countries, we work with clients as one team with a shared ambition to achieve extraordinary results, outperform the competition and redefine industries. We complement our customized and integrated expertise with a vibrant ecosystem of digital innovators to deliver better, faster, and more lasting results.Our 10-year commitment to invest more than 1 billion dollars In our pro bono services, we bring our talent, expertise, and insight to organizations addressing today’s most pressing issues such as education, racial equity, social justice, economic development, and the environment. We received a Platinum rating from EcoVadis, the leading environmental, social and ethical performance assessment platform for global supply chains, placing us in the top 1% of all companies. Since our founding in 1973, we have measured our success by the success of our clients and are proud of our industry-leading client advocacy.
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