Jakarta. A report from Bain & Company names Singapore as leader by value in mergers and acquisitions in Southeast Asia in 2014, while Indonesia’s election uncertainty is blamed for the country last-place finish.
“Asia Pacific Private Equity Report 2015,” published last month, shows Singapore as having led the private equity deals in the bloc, producing two mega deals totalling $2.3 billion last year, helping push overall investment value in Southeast Asian market to $5.9 billion.
This result is slightly better than 2013, but still 7 percent below the five-year average.
“For the last several years, private equity investors looking to diversify their exposure to the much larger markets of China and India have piled into Southeast Asia, hoping that the fast-growing sub-region would catch fire,” the report said.
“For a variety of reasons — heavy competition, too few targets, macroeconomic and political issues — they are still waiting.”
The Boston-based consultancy firm said Indonesia placed as the largest disappointment among the Southeast Asian community, where investment value slid for a fourth consecutive year to $298 million.
Bain said “investors fretted over high prices and waited for the outcome of midyear elections.”
“In the wake of the Indonesian elections, the new regime is sending positive signals to the business community, and macro trends more broadly are favorable,” Bain said.
Meanwhile, smaller markets such as the Philippines and Thailand contributed to the robust growth in merger and acquisition deals in the region last year, despite rich valuations in the Philippines and a military coup in Thailand.
As for exits, the consulting company said “investors, or general partners, throughout the region worked hard to produce transactions, but they were often not comfortable with the price they could get, causing delays.”
Investors closed as many exit transactions last year as the previous year, but almost half were valued at less than $50 million, and total value slid to $4.4 billion — the worst showing since 200, the consulting firm said.
“Despite all this, investors still view Southeast Asia as an Asia Pacific gem. General partners, or investors, expect the sub-region to top China as the most attractive market for new deals in 2015,” the report said.
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