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Fewer private-equity deals in H1 2016 as investors become more selective

Wednesday, September 28, 2016 - 13:54

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Private-equity (PE) deals in South-east Asia slipped in the first half of 2016 as PE firms adopted a more selective approach when assessing investments.

PRIVATE-EQUITY (PE) deals in South-east Asia slipped in the first half of 2016 as PE firms adopted a more selective approach when assessing investments.

This is particularly true for the technology sector, according to EY's latest quarterly report on PE deals in the region released on Wednesday.

Investments made into the technology sector brought down the overall value of PE deals completed in H1 2016 to US$1.56 billion, 17 per cent lower than in the same period last year. The total number of deals was down by 36 per cent year on year.

Joongshik Wang, EY Asean transactions leader for technology, media and telecommunications, said: "It is clear that the tech sector is now entering a new phase. Valuations have come off, with concerns not just around the sustainability of business models but, more importantly, the exit."

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He added that there is increased interest from mainstream PE investors, who are spending more time "looking at and understanding the sector before they dip their toes in the water".

According to the EY report, the muted volumes in transactions across South-east Asia reflect what is seen globally. Total value of investments globally has fallen by 14 per cent year on year.

The report said: "This is in part due to PEs adjusting to a tighter financing market and shows the industry's continued patience towards investing."

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