As the Asia-Pacific region continues to struggle with fundraising, many are looking to the Southeast Asia region as the next big breakthrough.
Accordingly Private Equity International According to the data, funds in Asia-Pacific generally raised $49.2 billion last year, a significant decline from the $77.6 billion raised in 2022 and less than half of the $122.9 billion raised in 2021. Only 187 funds held a final close in 2023 – roughly half of the 365 funds that closed in 2022 and less than a third of the 637 funds that closed in 2021.
The developing region of Southeast Asia has the potential to step in and fill this fundraising gap.
According to data from S&P Global, Myanmar has the highest share of PE/VC backing in the APAC region. Overall, Southeast Asian countries account for 40 percent of the top 10.
S&P measures penetration rate as the percentage of the number of PE or VC-backed companies to all private companies per market, and suggests that a higher percentage indicates a more attractive risk-reward ratio. In developed economies, this indicates conditions that support corporate growth, such as entrepreneurship and innovation, GDP growth, and commercial maturity.
There are few funds that focus specifically on Southeast Asia, and those that exist are considerably smaller than the funds that focus on Asia more broadly.
The decline in Southeast Asia activity mirrors the decline across the Asia Pacific region. According to EY data, PE investment in Southeast Asia fell by more than 71 percent between Q4 2023 and Q1 2024. However, there was a slight improvement from Q1 2023 onwards, surpassing the $546 million invested in Q2 2021 during the PE funding boom.
In terms of sector focus, according to EY data, the real estate sector accounted for the lion’s share of activity in the first quarter of 2024. Gaw Capital Partners’ $180 billion exit from Singapore’s Hotel G was the main driver of this activity. The hotel was sold to CapitaLand Investment’s Ascott division.
