After a two-year slumber following a decade of record capital inflows, private equity (PE) in the Asia-Pacific region posted a surprisingly strong start in 2014. Investment value in the first quarter shot up to US$22 billion, more than double the total over the same period last year. Exit value improved in several important markets, and a number of large investors appeared poised to increase their commitments to PE firms operating in the region.
As always, the headline numbers don't tell the entire story. The early-year surge lacked breadth and was dominated by a number of megadeals, including Temasek Holdings's $5.7 billion agreement to acquire one-quarter of Hong Kong retailer AS Watson Group in March. Deal value has also slacked off somewhat in recent months - the second quarter has so far been less impressive than the first.
But even if increased deal activity comes in fits and starts, what's most encouraging is that the PE industry is finally beginning to recycle capital - a necessary prerequisite to restoring healthy long-term growth. As the industry works its way through a crucial multiyear transition, the increases in deal value and exit activity are important signs of progress.
Though the various Asia-Pacific economies remain among the most attractive emerging markets in the world, the PE industry has been suffering the aftereffects of a pre-2011 investment boom and subsequent economic slowdown - most notably in China.
As competition for attractive target companies has grown, valuations have skyrocketed, making it difficult for PE firms to pare down mountains of unspent capital. And a combination of economic uncertainty and volatile markets for initial public offerings has dampened exit activity, limiting distributions to investors and discouraging new capital commitments.
Source-Jakarta Post
Is Asia-Pacific private equity on the rebound?
FE Team | Published: August 03, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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