Private equity deal activity in Apac hits 5-year low in 2022: S&P

PRIVATE equity and venture capital investments in the Asia-Pacific excluding Japan declined in 2022, continuing on a downward trajectory since the third quarter of 2021.

The aggregate transaction value and number of deals fell to their lowest levels in the past five years in 2022, with 208 transactions valued at US$35.4 billion.

Activity peaked in 2021 with 347 deals valued at US$74.1 billion, according to data from S&P Global Market Intelligence on Thursday (Jan 26). 

The financial information services provider noted that private equity investments in the region reached a two-year high in Q3 2021. Deal value and volume started to slow after that period. 

The number of actual deals fell to 42 in the fourth quarter of 2022, from 79 deals in the same period in 2021. Q4 2022 aggregate transaction value also dropped to US$5.4 billion, from S$20.1 billion in the year-ago period. 

Global Private Capital Association chief executive officer Cate Ambrose attributed the 2022 slowdown to a sharp fall in investment, driven by a pullback of US institutional investors in China. 

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Investment capital is also being re-allocated to India, which is seeing some excitement due to the scale of the market, Ambrose said in an interview with S&P Global Market Intelligence. 

Notably, investors are viewing India and South-east Asia technology companies more favourably compared with their US and Chinese counterparts, she added. 

Meanwhile, mergers and acquisitions (M&A) activity in Asia-Pacific rose to US$204 billion in the Q4 2022, from US$179 billion in Q4 2021. However, transactions with private equity involvement fell to 2.7 per cent of the total M&A value, compared with 12.6 per cent the year before. 

The largest transaction with private equity involvement in 2022 was EQT AB’s US$7.5 billion buyout of Baring Private Equity Asia. Coming in second was Hina Group and Industrial Bank Co’s Shanghai branch’s US$2.9 billion bid to acquire software services company Vnet Group.