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According to management consultancy Bain & Company, the total value of private equity deals in Asia Pacific fell last year to its lowest level since 2014 as fundraising fell to a 10-year period due to slowing growth, high interest rates and volatile public markets. fell deeply.
However, Japan was an outlier: deal value rose 183% in 2023 compared to the previous year, making the country the largest private equity market in Asia-Pacific for the first time, according to Asia-Pacific Private Equity published on Monday Bain 2024 Report.
Japan is an attractive investment because of its large pool of target companies with a “significant pool for performance improvement” and pressure from corporate governance reform on Japan Inc. to divest non-core assets, Bain said.
Overall, transaction value in Asia Pacific fell more than 23% year-on-year to $147 billion. This is also 35% below the 2018-2022 average – a decline consistent with the global slowdown – and almost 60% below the peak of $359 billion in 2021, Bain said.
Exits fell 26% to $101 billion in 2023 compared to the previous year – 40% of which came via IPOs. Greater China accounted for 89% of Asia Pacific IPO exit value, with the vast majority listed in Shanghai and Shenzhen. Excluding Greater China IPOs, the total value of Asia Pacific exits was $65 billion.
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“The outlook for exits in 2024 remains uncertain, but successful funds are not waiting for markets to recover. “They pave the way for sales that achieve their target returns by leveraging strategy reviews to highlight the potential value of deals to buyers,” Lachlan McMurdo, co-author of the company’s annual report, said in a statement.
“This approach can reduce the inventory of aging assets and return cash to limited partners by 2024, even if the overall exit market remains weak,” he added.
Bain said many leading private equity funds have turned to exploring alternative asset classes, such as medium-to-high-return infrastructure operations, including renewable energy storage as well as data centers and airports.
Here are some highlights of the report:
- Last year, acquisitions accounted for 48% of total deal value in Asia Pacific, surpassing the value of “growth deals” for the first time since 2017, involving companies that are expanding rapidly and often disrupting industries.
- Despite a shrinking investor pool, private equity returns are still more attractive than public markets over five, 10 and 20 years, Bain said.
The timing of a recovery remains unclear, Bain said, although there were signs of some improvement toward the end of last year. If the recovery does have an impact, disruptive technologies such as generative artificial intelligence will be among the new areas that have “great promise,” Bain added.
Japan, India and Southeast Asia are among the Asia-Pacific markets viewed positively in terms of private equity investment opportunities over the next 12 months, Bain said, citing Preqin’s 2023 investor survey.
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2024-03-25 01:04:13
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