Evolving regulatory action a primary risk for PE-VC investors

High-growth India and Southeast Asia continue to capture investment in 2018 as investors capitalize on budding tech opportunities and emerging market plays outside of China, with private equity (PE) and venture capital (VC) investors announcing 170 tech transactions worth US$2.6 billion in Q1 2018. This reflects sustained momentum from 2017, during which India and Southeast Asia were recipients to US$18 billion in tech PE and VC deals, up from only US$6.5 billion in 2016.

In Kroll’s latest issue of Spotlight Asia, Staying ahead of change: Investing in disruptive tech in India and Southeast Asia, the firm covers investment trends but also Kroll’s insights on various sectors and market risks that can impact the success of a deal.

Kroll’s managing directors also highlight how investigative due diligence can help uncover often overlooked issues in Southeast Asia and India. Subscribe to Kroll’s bi-annual M&A report Spotlight Asia to ensure you receive the next one.

Key highlights include:

• Hot tech sub-sectors: Ecommerce, fintech, medical (pharmatech/medtech) and artificial intelligence stand out for their advances in cross-sector applications.

• Top target countries: India saw the majority of total tech PE and VC activity in the Indian and Southeast Asian markets from 2015-Q1 2018, accounting for 56% of deal value and 71% of volume. Coming in second, Singapore contributed to 33% of value and 10% of volume, followed by Indonesia with 7% of both value and volume.

• Foreign funds: While local or regional funds have been the dominant players in these markets, foreign investors have been making inroads. US investors took part in 25% of tech investment occurrences from 2015-Q1 2018, followed by Japanese (5%) and European (4%) funds.

• Mitigating risks: A look at sectoral, country and political risks that can impact investment success and the value of investigative due diligence to uncover potential liabilities.