SE Asia: a hard nut for private equity

Financial Times 31 May 2013
Southeast Asia’s credentials as the next great frontier for economic growth, spurred by young populations and cautious optimism over planned structural reforms is one this year’s big emerging market themes. Just look at the Philippines, which notched up 7.8 per cent growth in the first quarter, even beating China.
But for private equity, the region is proving a tough nut to crack. Last year, according to consultancy Bain & Co, was “underwhelming”. Deal value fell by 16 per cent to $4.9bn, the number of deals dropped to just 32, from 39 the year previously.
Southeast Asia’s share of Asian deal flow has actually been pretty flat these past three years at around 10 per cent.
The reasons Bain cites in its annual survey of trends in Southeast Asian private equity are intense competition; “absurdly” high valuations in the largest market, Indonesia; concerns about corporate governance in Vietnam; and “shaky macro-economic conditions”.
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