Exit concerns persist as South-east Asia PE investors prioritise strong management teams: Bain

[SINGAPORE] Among their Asia-Pacific (Apac) peers, South-east Asia private equity (PE) investors are most concerned about exit conditions, a report by consultancy Bain & Company on Friday (Apr 24) indicated.

Over 80 per cent of South-east Asia investors cited challenging exit concerns compared with just over 40 per cent of Apac investors. The former also made fewer exits than planned in 2025, with the exit environment viewed less favourably than in the preceding year.

Macroeconomic softness was cited as the key reason for the challenging exit environment, followed by underperformance and unpredictability in initial-public-offering (IPO) markets.

This is reflected in the region’s PE exit value in 2025, which declined 32 per cent to US$4 billion in 2025, from US$5.9 billion in 2024.

The PE exit count similarly fell 39 per cent to 11 in 2025, from 18 in 2024. This is in contrast to Apac, where exit values were higher in 2025 at US$150 billion, compared with US$121 billion in 2024.

Trade sales remain the dominant exit channel for South-east Asia PE investors, but Bain pointed to IPO activity showing early signs of recovery. However, exit overhang persists as assets are being held for longer, leading to return compression.

Strong management teams were cited as a key criterion in deal selection by 18 per cent of South-east Asia investors, followed by strong competitive advantage (15 per cent).

South-east Asia investors also perceived valuations to be lower in 2025, expecting them to increase in the next two years. Top-line growth is expected to be the biggest driver of returns in the future, with leverage playing a declining role.

Both deal value and volume in South-east Asia fell in 2025. Total deal value was US$14 billion in 2025, down from US$15 billion in 2024. Deal volume declined from 93 in 2024 to 81 in 2025.

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Singapore continues to account for the bulk of PE deals in South-east Asia, while Indonesia’s share of deal count and value shrank between 2024 and 2025.

“The South-east Asia PE market is stabilising, but the recovery is narrow and shaped by exit constraints,” said Tom Kidd, head of Bain’s South-east Asia PE practice.

On the digital infrastructure front, Malaysia, Thailand and Indonesia are emerging as data centre destinations, while Singapore remains constrained.

Most of the growth for data centres in South-east Asia will come from Malaysia, Thailand and Indonesia, with Malaysia projected to account for the bulk of data centre power demand by 2030.

In Apac, the number of data centre deals rose over 12 times, from five in 2018 to 67 in 2025 (including agreed and in-progress deals).

“In almost every scenario, there is going to be a significant increase in AI capacity demand in South-east Asia that has necessitated a significant diversification away from Singapore being the only game in town,” said Usman Akhtar, senior partner and head of Bain’s South-east Asia PE practice.