Southeast Asia to attract more private equity investments
AsianInvestor
AsianInvestor
Global Co-Chair of Private Equity Practice Marcia Ellis has been quoted in an article published by AsianInvestor on the private equity outlook for Southeast Asia in 2023.
In the article, Marcia shared her thoughts on the investment momentum for technology, healthcare, life sciences, and financial services in the region. “These are areas in which we have consistently seen our clients show strong interest throughout the Covid years and in which we expect to continue to see strong interest.”
“Covid has revealed real gaps in the health care systems in many jurisdictions in Asia and thus strengthened the appetite of consumers for private and specialised health care facilities. We expect to see PE investment in this sector especially in South and Southeast Asia.”
“MNCs are shifting manufacturing away from China for reasons including US/China tensions, rising wages in China and the shrinking Chinese population.”
Additionally, Covid taught all investors that they shouldn’t have all of their eggs in one basket in case there are lockdowns impacting one jurisdiction and not others, she said.
“The ability to be able to continue production is key. We have already assisted PE funds doing bolt-on acquisitions for their Chinese portfolio companies to add manufacturing facilities in, for example, Vietnam. We also expect to see PE funds providing financing to companies that want to diversify their manufacturing base,” said Marcia.
On China open, Marcia said, “We are already seeing an upswing in PE activity in China. There is an expectation that China’s growth engine will move into at least moderately high gear by Q2 or Q3 at the latest and PE funds will chase those growth opportunities”.
Chinese GPs are also seeking more diversified exposure and are keen to attract new capital in Southeast Asia, particularly from family offices in Singapore, she said.
“Credit funds and special situations funds are currently quite hot,” and have been gaining the traction with Asian and APAC institutionals, she added.
With rising costs and tighter credit markets, Marcia expects private equity funds to try and optimise the performance of their portfolio companies by focusing on profitability.
“Debt market conditions will improve over 2023, especially if the Fed funds rate peaks or plateaus. This will also affect the pace of exits as the economic situation improves in certain countries or regions.”
Read the full article.