S’pore only S-E Asian market to see growth in private equity deals, deal value in 2020: Report (The Straits Times)

Singapore was the only market in South-east Asia to see growth in private equity deals and deal value in 2020, amid greater slowdown in investment activity in the region compared with elsewhere in the Asia-Pacific.

A report released by global consultancy Bain & Company on Friday (May 21) noted that the muted activity in Asean was due to factors such as the varied Covid-19 impact across countries in the region and border restrictions limiting cross-geographical travel – a component usually required to complete due diligence processes.

About US$9 billion (S$12 billion) of private equity deals were struck in the region in 2020, down from the US$12 billion seen the year before. The number of deals fell to 106 from 115 in 2019.

But there were signs of recovery from the third quarter of last year, with US$2.2 billion of deals struck from July to September. This rose to US$3.8 billion in the final quarter.

Bain & Company private equity partner Usman Akhtar highlighted in a virtual panel that Singapore was less affected by the coronavirus  pandemic last year compared with some of the other South-east Asian markets, managing infections relatively well.

“As a result, confidence in Singapore assets grew,” he said.

Another factor for Singapore’s resilient showing was that many firms are headquartered in the country and, as a result, investments in these firms are booked here, even though they could have significant operations outside of Singapore, Mr Akhtar said.

Overall, fund raising globally softened, with Asia-Pacific-focused funds seeing a 32 per cent decrease last year compared with 2019.

The Internet and technology sector remains dominant in terms of deal value for Singapore and Indonesia, while healthcare is starting to see a noticeable share of the pie. Digital health services are expected to see continued growth throughout the region in the next three to five years.

Private equity firms are increasingly focused on opportunities related to digital health and e-learning in South-east Asia, with growth anticipated in these sectors as well as e-commerce, although valuations can be challenging.

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The Straits Times

21 May 2021

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