S'pore is SEA's most active private equity market in 2013

SINGAPORE has emerged as the most active private equity market in South-east Asia (SEA) in 2013, led by a boom in Internet-related, healthcare and services deals, a latest Bain & Company report revealed.

Deal value in the Republic more than trebled from US$0.9 billion in 2012 to US$3 billion, contributing 60 per cent to the region's US$5 billion deal value in 2013.

"SEA saw a notable surge in early stage and startup deals; these rose by 292 per cent year-on-year in deal value and averaged US$76 million in deal size," Suvir Varma, a partner at Bain & Company, told The Business Times.

And, Singapore certainly backed this trend, as early stage and startup deals here more than doubled to over 20 per cent of total deal volume, up from 9 per cent in 2012.

"This likely reflects a growing startup ecosystem, as we had more people - Singaporeans and foreigners who moved here - foray into entrepreneurship in 2013. And talent attracts funding," Lim Kuo-Yi, partner at Monk's Hill Ventures, told BT.

Added Vinnie Lauria, partner at Golden Gate Ventures: "I would attribute the rise to government support in seed-level funding for startups, many of which are now seeking their next round of funding. This has boosted private investors' confidence in the ecosystem."

This comes as the larger Asia-Pacific private equity market fell by about 20 per cent to US$45 billion in 2013, a second consecutive year's decline for the region.

Bain & Company chalked the 2013 decline up to four factors: the shift to small-ticket deals (which involved mostly Internet-related companies); the slowdown in exit activity (by about 34 per cent); the fall in Asia-Pacific-focused funds (by some 30 per cent); and weaker average returns on investment.

But it said the region is poised for an upturn in 2014, having already locked in US$22 billion in deal value - close to half of 2013's total deal value - for new activity by the end of the first quarter.

Singapore looks off to a good start too, with US$2.4 billion already registered in deal value for Q1, representing about 80 per cent of total deal value for the whole of 2013, according to the report.

"Singapore-based investors are actively investing in the region, such as GIC's US$76 million investment in Philippines-based canned foods distributor Century Canning Corporation. At the same time, global players are putting their money into regional businesses too; the most recent example being US-based KKR nearing a deal to buy Singapore packaging company Goodpack," noted Mr Varma.

"Given the significant capital overhang (money raised but not yet invested), we expect deal flow to remain robust throughout 2014, as long as valuations remain reasonable."