Region's private equity deals in Q3 2016 outstrip total investment in H1 2016

PRIVATE equity (PE) players have been investing more across South-east Asia in the third quarter of 2016, outstripping the total investment in the region in the first half of the year, with a majority of the total capital going into two ride-hailing applications focusing on Indonesia.

The overall value of the 32 PE deals closed in Q3 2016 was US$1.91 billion, more than the total of US$1.56 billion invested in the region in the first half of the year, according to the EY Private Equity Briefing: Southeast Asia (December 2016) report.

A staggering US$1.3 billion was raised in Q3 2016 by the region's two ride-hailing apps.

Go-Jek closed a US$550 million fundraising in August, led by KKR and Warburg Pincus, that also saw participation from Farallon Capital, Capital Group Private and existing shareholders. The investment valued Go-Jek at over US$1 billion.

Next, led by SoftBank Group, GrabTaxi raised US$750 million in September and saw investments from undisclosed existing and new shareholders.

PE firms are also increasingly diversifying into and exploring emerging markets such the Philippines, Thailand and Vietnam. Investments in frontier markets such as Cambodia, Laos and Myanmar remain limited for now, the report noted.

Luke Pais, EY Asean M&A and private equity leader, said: "The Philippines, Thailand and Vietnam, which have been dominated by local funds to date, are being actively targeted by regional PE houses currently.

"As these economies continue to evolve, the number of opportunities of sufficient size is increasing. However, political instability remains one of the key concerns for investments.

"For the frontier markets, investments are still focused on building infrastructure such as banking and communications currently. That said, many PE players still view these markets as part of their long-term growth story."