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Disruption from COVID-19 hits ASEAN private equity hard

Wednesday, July 01, 2020
Opalesque Industry Update - After a strong 2019, the ASEAN private equity industry has been shaken by the outbreak of the COVID-19 pandemic, reports Preqin.

As of September 2019 (the latest data available), ASEAN-focused private equity and venture capital assets under management had reached a record-high $29bn, an increase of 23% from December 2018. In 2019, private equity funds secured an aggregate $6.0bn - but in the first quarter of 2020, no capital was raised by ASEAN-focused private equity funds. Similarly, venture capital fundraising reached a new high of $2.0bn in 2019, but only one fund closed in the first three months of 2020, at a size of $150mn. Dealmaking also slumped dramatically - in Q1 2020, deal value reached $0.2bn and $2.7bn for private equity-backed buyout deals and venture capital deals respectively.

However, in this new environment, there are some emerging sectors that are attracting increasing attention: healthcare, fintech, and logistics & e-commerce.

Ee Fai Kam, Head of Asia Research & Operations, commented: "ASEAN private equity was at its best-ever position at the end of last year. Fundraising and dealmaking reached record levels, and assets under management saw three consecutive years of record highs. But the outbreak of the COVID-19 pandemic has affected the ASEAN private equity market. Travel restrictions have had an outsized impact on fundraising activities in ASEAN, as the bulk of the investor base is situated offshore. Dealmaking also decreased amid the pandemic, but with the new environment, new opportunities are coming up in emerging sectors. Demand for quality healthcare in Southeast Asia is rising exponentially, digital transformation is imminent, especially in companies and traditional financial institutions, and there is an increasing need for tech-enabled logistics and e-commerce platforms to efficiently serve consumers' demand."

Key Southeast Asia Private Equity & Venture Capital Facts:

As of September 2019 (the latest data available), ASEAN-focused private equity & venture capital assets under management reached $29bn. As of December 2018, AUM was at $23.6bn.
In Q1 2020, no capital was secured by ASEAN-focused private equity funds. Fundraising in venture capital reached only $150mn with one fund closed.
In the first three months of 2020, there were only 10 private equity-backed buyout deals, with an aggregate deal value of $0.2bn. Venture capital deal value ascended to $2.7bn with 101 deals completed. In 2019, 69 private equity-backed buyout deals closed reaching $3.7bn and 579 venture capital deals collecting $7.0bn.
Healthcare, fintech and logistics & e-commerce are attracting particular interest in Southeast Asia.
Most known investors in ASEAN-focused funds (79%) are based outside the region.


Press release
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For more information and analysis, see the full Private Equity & Venture Capital in Southeast Asia's Digital Evolution report here:

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