South-east Asia scored a record year in private equity with US$20 billion (S$26.7 billion) in deal value last year, more than double the US$8 billion recorded in 2016, going by Bain & Company's 2018 South-east Asia Private Equity Report that was released last week.
Singapore led the region's performance with more than US$5 billion in deal value, due mainly to ride-hailing firm Grab's fund raising of more than US$2.5 billion last year.
Mr Suvir Varma, a partner at Bain and leader of the firm's Asia-Pacific private equity practice, said: "Without a doubt, this was an incredible year for private equity investments in South-east Asia."
The region's success was also linked to a number of mega deals valued at over US$1 billion each, as well as a strong showing across various sub-asset classes and a positive impact from the digital sector, said Bain.
Average deal size last year was found to be US$284 million, up from US$130 million in 2016, with the Internet and tech sector forming a large share (39 per cent) of the deals, suggesting that the digital sector is "rising in the minds of investors".
The report also found sustained interest in "venture capital and early-stage" deals, the value of which rose to US$4 billion last year from an average of US$1 billion from 2012 to 2016. This was bolstered by strong involvement from strategic investors in growth and earlier rounds, said Bain.
With this solid momentum from 2017 behind us, one can expect South-east Asia to remain at the forefront of investors' minds as they look to invest in Asia.
MR SUVIR VARMA, a partner at Bain & Company and leader of the firm's Asia-Pacific private equity practice, on the stellar year for private equity investments in South-east Asia in 2017.
"However, pricing remains tough, with deal multiples near all-time highs," Bain noted. Last year, the average deal multiple came up to about 15X. In 2016, it was just below 15X, and in 2015, about 16X.
General partners from mostly venture capital funds faced increased competition from multiple directions, according to the report. About 70 per cent of the 136 senior private equity practitioners surveyed said they expect competition to increase moderately or significantly this year.
The biggest threat for general partners in the Asia-Pacific was found to be local or regional private equity firms (63 per cent), followed by strategic or corporate players (47 per cent).
Mr Varma said: "With this solid momentum from 2017 behind us, one can expect South-east Asia to remain at the forefront of investors' minds as they look to invest in Asia."