Private equity in Southeast Asia ready for the next phase of growth

Hanoi, Vietnam. Photo: Thijs Degenkamp/unsplash

For the last two years, Southeast Asia has seen a large influx of investors and capital flowing into the region. The region’s private equity sector, however, has been relatively slow to develop.

Until now, that is. A recent report by Bain & Co stated that Southeast Asia’s private equity sector is “ripe for the next phase of growth”.

The year 2018 saw PE giants such as Warburg Pincus and KKR inject more capital into businesses based in Southeast Asia. On top of that, the advent of larger Asia-focused vehicles is also likely to spur more investments in Southeast Asia, feel industry executives, although it may be more opportunistic initially.

“Southeast Asian economies, broadly speaking, have not scaled to the extent that a consistent stream of large-cap deals can support mega-cap regional or country funds here. Hence, the mega-cap pan-Asian and global players have generally approached Southeast Asia on an opportunistic, rather than a dedicated basis,” said Morgan Stanley Private Equity Asia CEO Chin Chou.

PE firms are also increasingly venturing into what has been traditionally seen as VC territory in the region, points out global law firm Linklaters partner Parthiv Rishi.

“Given the size of some of these capital raisings and the high-profile nature of some of the companies raising capital, we have seen the increasing entry by large, traditionally buyout focused PE funds competing alongside the more traditional VC funds in this space – something they have not necessarily done elsewhere across the globe. We will continue to see a convergence of the more traditional buyout funds competing with, and investing alongside, the more traditional VC funds in venture capital-style fundraisings,” he told DEALSTREETASIA.

Challenges in SEA

One of the biggest challenges in Southeast Asia is the lack of sizeable deal flows to accommodate the record dry powder. Historically, PE investments in the region have hovered for years between roughly $6 billion and $9 billion, based on a recent report by Bain & Co.

Rishi agreed although he noted the opportunities and deal flow in Asia are amongst the best globally which is why fundraisings have been so successful and why overseas investors are opening up offices across Asia to help facilitate deal origination and positioning.

“To compete in this environment investors will need to innovate to deploy their capital in smarter ways on both the upstream and downstream sides and to build closer and deeper relationships with founders and management.

“We have noticed that the funds that have been particularly successful in the region have, on top of having deep, existing relationships, have been able to harness internal operations expertise within their platforms and portfolios to demonstrate how they can add value to target businesses especially when it comes to overseas expansion strategies,” he said.

Bain & Co’s senior advisor for Global Private Equity practice, Suvir Varma, noted that competition from local conglomerates in markets such as Thailand, Indonesia and the Philippines has also served as an investment barrier.

“Today, the main challenge is the rising competitive intensity in the investment landscape from all angles. Traditional funds are facing increased competition from sovereign wealth funds and other institutional investors, corporate venture capital divisions, conglomerates from China and Japan, and more,” he said.

Another challenge of investing in the private equity space in Southeast Asia is scalability, due to vast cultural differences and varying regulations across a number of jurisdictions.

“It will be interesting to see how the rise of tech-focused businesses influence and disrupt this dynamic. Investors certainly have confidence in the ability of tech businesses to be able to effectively expand across regions and this is borne out through some of the recent valuations,” said Rishi.

To this end, local governments have been working to spur investments in the PE and VC sectors. In November, the Monetary Authority of Singapore launched a $5-billion fund focused on investing in private enterprises and infrastructure projects. In Malaysia, the government has allocated about $480 million for co-investment alongside PE and VC players in strategic sectors and new growth areas.


Asian PE funds that were launched/had first close/closed in 2018:

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FundFirmFund size (million)Geographical focus
Creador IVCreadorUS$ 550Southeast Asia
Centurion Student Accommodation FundCenturion CorporationUS$ 51.1Singapore, Australia, the UK and the US
COPE IVCOPE Private EquityUS$ 70Malaysia
ASLF IIADM CapitalUS$ 178Emerging markets in Asia
Asia Agriculture Technology FundVanda Global CapitalUS$ 1,500Asia
Warburg Pincus Global Growth FundWarburg PincusUS$ 13,750Global
PAG Asia Fund IIIPAGUS$ 6,000Asia
Hillhouse Fund IVHillhouse CapitalUS$ 10,600Asia
Baring Private Equity Asia Fund VIIBaring Private Equity AsiaUS$ 6,000Asia
CVC Asia Fund VCVC Capital PartnersUS$ 5,000Asia
North Haven Thai Private EquityMorgan Stanley Private Equity AsiaUS$ 440Thailand
Bain Capital Asia Fund IVBain CapitalUS$ 4,650Asia
TPG Asia VIITPG Capital AsiaUS$ 4,000Asia
Axiom Asia VAxiom Asia Private EquityUndisclosedAsia
Axiom Asia Co-Investment FundAxiom Asia Private EquityUndisclosedAsia
Navis Capital VIIINavis Capital PartnersUS$ 1,750Southeast Asia, Australia, China
Capsquare Asia Partners Fund IIICapsquare Asia PartnersUS$ 150Indonesia
ADV Opportunities Fund IIADV PartnersUS$ 597pan-Asia
Gateway Real Estate Fund VIGaw CapitalUS$ 2,000Greater China, Japan, South Korea, Australia and Southeast Asia
Asia Credit FundVärde PartnersUS$ 400Asia
EFA Financial Institutions Debt FundEFA GroupUS$ 100Emerging markets in Asia and Eastern Europe
L Capital Asia IIIL Catterton AsiaUS$ 1,500Asia
Southern Capital Fund IVSouthern CapitalUS$ 500Southeast Asia
Lion-OCBC Capital Asia Fund IOCBC BankUS$ 397Asia
Asia Value Fund 2017Shawkwei & PartnersUS$ 812pan-Asia
EQT Mid Market Asia IIIEQT PartnersUS$ 800Greater China and Southeast Asia
Northstar Equity Partners VNorthstar GroupUS$ 800Southeast Asia, with a primary focus in Indonesia
Vietnam-focussed vehicleACA InvestmentsUS$ 100Vietnam
LaSalle Asia Opportunity VLaSalleUS$ 1,100Australia, China, Hong Kong, Japan, Korea and Singapore
Myanmar SME Venture FundAnthem AsiaUS$50Myanmar

Significant PE deals in 2018:

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FirmInvestment in Southeast AsiaInvestment size (million)
KKRSingapore-based V3 GroupUS$ 366
Allianz Real EstateSingapore-based Ocean Financial CentreUS$ 392
Warburg PincusHong Kong-based Weave Co-livingUS$ 181
KKRSingapore-based PropertyGuruUS$ 144
KKRSingapore-based Barghest Building Performance (BBP)US$ 33
Kendall CourtIndonesia-based Mandaya MedicalUS$ 55
Navis Capital PartnersVietnam-based Saitex HoldingsUndisclosed
Navis Capital PartnersMalaysia-based DscaffUndisclosed
Warburg PincusVietnam-based TechcombankUS$ 370
KKRPhilippine-based VoyagerUS$ 175
EkuinasMalaysia-based Flexi VersaUndisclosed
Standard Chartered Private EquitySingapore-based Tat Hong HoldingsUS$ 312
YY Inc and othersSingapore-based Bigo TechnologyUS$ 272
Bain Capital Private EquitySingapore-based DSM Sinochem PharmaceuticalsUS$ 582
Toyota Motor Corp, Macquarie Group and othersSingapore-based GrabUS$ 2,000
Hyundai Motor, Kia MotorsSingapore-based GrabUS$ 250
CVC Capital PartnersMalaysia-based Munchy Food IndustriesUS$ 283
KV Asia CapitalMalaysia-based APIIT Sdn BhdUS$ 181
Affinity Equity PartnersMalaysia-based INTI Universal HoldingsUS$ 180
KKRIndonesia-based Go-JekUS$ 1,500
SoftBank and othersIndonesia-based TokopediaUS$ 1,000
KKRUnilever IndonesiaUS$ 210
CVC Capital PartnersIndonesia-based Garudafood Putra Putri JayaUS$ 150
Astra InternationalIndonesia-based Go-JekUS$ 150

Also Read:

Endowments to continue favouring private equity investments in 2019

Global private equity buyout deals in technology set for record high

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.