Asean PE investments grew 3-fold to $10b in 2014

From left: Maybank Group president and CEO Abdul Farid Alias, Bursa Malaysia CEO Tajuddin Atan and Maybank Kim Eng Group CEO John Chong at a press conference during the Asean CAP10 CEO Summit.

Private equity (PE) investments have grown threefold, to over $10 billion in the Asean region in 2014. A bulk of these investments have been committed to firms in the technology and consumer spaces.

This was revealed in the Maybank Kim Eng Research chart book distributed at the Asean CAP10 CEO Summit. According to the research, capital raising for start-up investments tripled from $3.2 billion in 2013 to $10.6 billion, last year.

While technology and consumer sectors were both the most well-received by private equity money, the internet factor was the key driver for these investments, the report added.

A chart showed that the top private equity investments in 2014 were largely in the e-commerce space, where the total surpassed $4.5 billion. Investments in the consumer internet space came second, at over $1.5 billion.

 

Private Equity funding in Asean in 2014
Private Equity funding in Asean in 2014

 

This trend was a follow-up from the trend in 2013 which saw e-commerce as one of the top investment targets with about $2 billion investments from PE players. The second most invested sector was the internet businesses, at about $750 million.

“The sector distribution, we suspect, means that many of the businesses are scalable. Effectively, companies are building online and tech-based strategies as the economies become more digitized. And companies are already beginning to ‘think Asean’,” Maybank Kim Eng Research noted in the chart book.

In the merger and acquisitions (M&A) scene though, consumer and financials sectors dominate, especially the non-cyclicals (refer to the chart below).

 

Consumer & Financial dominate regional M&A
Consumer & Financial dominate regional M&A

 

The research house noted that the sector composition was not surprising and that it will be interesting to see whether there will be greater M&A in the resources sector, as commodity cycle rolls over.

“M&A have risen in the recent years in the lead up to the launch of the Asean Economic Community. We think total M&A is a better reflection given the changing opportunities in the region,” the research house commented.

In the five year prior to 2007, M&A activities within and outside the region averaged at $23 billion a year. In the five years after, until 2014, the average more than doubled to $47 billion.

The data was collated from McKinsey Global Institute, MasterCard International and J Walter Thompson.

Malayan Banking Group (Maybank) president and CEO Abdul Farid Alias noted that the private equity funds, or ‘smart money’, have been flowing into the region indicating good opportunities that investors are willing to put money into.

“If (foreign private equity firms) are doing this, why are we not (doing it)?” he told DEALSTREETASIA, commenting on the significance of understanding the trend of foreign private equity funding in this region.

Speakers at the summit emphasised on the need for current leaders for the respective Asean nations to deepen their collaboration to form an integrated economic region.

Indonesia former minister of trade and Ancora Capital founder Gita Wirjawan remarked: “I feel the leaders now are not as committed to the Asean agenda as our forefathers were, when they were setting up the association of these ten countries.”

Similarly, businesses needed to move towards building for a single Asean market, rather than in their domestic markets.

Bursa Malaysia CEO Tajuddin Atan said “there has to be this mind shift to be and to think Asean”.

“The conversation about Asean has been going on for a while now. We feel that the need to shift the focus onto actionable targets now, especially with Malaysia being the chairman of Asean this year,” he said at a press conference.

Malaysia assumes the chairmanship of Asean this year, which incidentally is also the pivotal year when the Asean Economic Community is to be formed.

Malaysia prime minister Mohd Najib Abdul Razak said in his keynote address at the summit there will be challenges in deepening institutional ties and infrastructure links.

“But the seven stock exchanges of Asean provide one example of what we can do together. Three years ago, the Asean Exchanges collaboration was created to attract new global investors and bring liquidity to a more ‘integrated’ Asean market and related asset classes,” he delivered in his speech.

The collaboration has helped regional expansion of highly professional Asean-grown equity market participants, and led to the development of new Asean equity indices that provide a global benchmark for Asean market performance, Najib added.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.