South-east Asian conglomerates lag behind pure-play firms, Bain report finds

[SINGAPORE] South-east Asian conglomerates have lost ground to pure-play companies between 2016 and 2025, despite their previous outperformance from 2003 to 2012, consultancy firm Bain & Company said in a report released on Monday (Mar 16).

Bain found conglomerates earned, on average, annual total shareholder returns of 4 per cent between 2016 and 2025, five percentage points lower than pure-play companies.

It noted that the top quartile of conglomerates yielded 20 per cent total shareholder returns, compared to returns of 28 per cent from pure-play companies in the same period.

The eight percentage point gap between both sets of companies is an improvement from the 16 percentage point gap observed between 2013 and 2022.

Key challenges that conglomerates face include an erosion of traditional advantages in access to decision makers, regulatory bodies, talent and capital.

Bain also highlighted recent economic slowdowns and leadership successions as first and second-generation leaders hand the reins to younger executives.

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Conglomerates in the lower quartiles of performance seeking to improve returns should maximise their core business value, manage their portfolios actively, optimise their capital structures and transform their operating models, Bain said. REUTERS