Private equity challenge: Investing smart in turbulent times

ASIA-PACIFIC private equity (PE) investors turned cautious in 2022 amid a difficult and uncertain economy. Deal value for the region fell 44 per cent in 2022, ending two years of record investments. In South-east Asia, PE deal value declined more than 50 per cent for the full year, and tumbled further in the first half of 2023, down 68 per cent compared with the same period the previous year.

These results have left Asia-Pacific PE managers less optimistic about future returns than they were a year ago, according to Bain’s 2023 Asia-Pacific Private Equity survey. Asia-Pacific exits and fund-raising also fell sharply in 2022, with exit value down 33 per cent year-on-year. In South-east Asia, exits fell by 46 per cent.

Many conditions contributed to investor gloom, including slower economic growth, declining consumer confidence, falling manufacturing output, high inflation, and heightened geopolitical tensions. Macroeconomic weakness is now the number one concern keeping the region’s investors awake at night, according to our survey.