The EY Quarterly Private Equity Update: Asean (3Q2024) was released on Nov 11.

Private equity (PE) deal volume in Southeast Asia saw a dip in 3Q2024, with US$6.1 billion ($8.1 billion) in capital deployed across 20 PE-backed deals, a report released by EY on Nov 11 states.

The EY Quarterly Private Equity Update: Asean (3Q2024) provides a quarterly roundup of the PE deals and capital activities across major sectors in Southeast Asia.

Deal value increased by 8% y-o-y, while average deal size improved from US$375 million in 2Q2024 to US$434 million in 3Q2024.

The real estate sector accounted for 40% of PE deal value in Southeast Asia in 3Q2024, as the region continues to attract investor attention in real estate, particularly with the expectation of lower interest rates.

This is primarily driven by Warburg Pincus’ acquisition of a portfolio of business parks and specialist facilities in Singapore for US$1.2 billion.

The real estate sector is followed by the healthcare and infrastructure sectors, which constituted 18% and 16% of PE deal value, respectively.

“In addition, Southeast Asia is attracting significant investments to address financing gaps to achieve the goal of clean energy transition and carbon neutrality by 2025,” EY notes.

PE investments in renewable energy constituted 10% of capital deployed in 3Q2024.

Key transactions include Actis investing US$600 million and acquiring a 40% equity stake in Philippines’ Terra Solar project and Cyna Renewables receiving development capital from Alberta Investment Management in August 2024.

Luke Pais, EY Asia-Pacific PE leader, says “PE activity in SEA continues to gain momentum. While investment is still relatively concentrated in a few sectors, such as digital infrastructure, health care and renewables, the deal pipelines reveal that a broader base of deal activity will be observed in the period ahead.”

For exits, 3Q2024 saw an increase in exit value of US$4.1 billion, compared to US$1.1 billion in the previous quarter, as deal volume remained low with nine PE-backed exits.

EY notes that the US Fed 50 basis points (bps) rate cut in late September, with the expectation of further lowering of interest rates, may benefit Southeast Asia and Asia-Pacific initial public offerings (IPO) markets by improving investor sentiments, lowering borrowing costs and enhancing equity valuations.

This is expected to counter some of the prevailing headwinds in the region recently.

For fundraising, there were two Southeast Asia-based PE funds that closed in 3Q2024, raising a cumulative capital of US$800 million, compared to US$5.4 billion in 2Q2024.

PE deals accounted for 11% of overall mergers and acquisition (M&A) deal volume in Southeast Asia during 3Q2024, compared to 16% in 2Q2024. 

The report also highlighted that a growing number of family offices are making substantial investments in private markets, which looks to drive PE activity.

Family offices account for a third of SEA-based limited partners in 2024, up from 20% in 2020.

“Looking ahead, it is anticipated that PE activity in SEA will close on a positive note for 2024. This expected upsurge is likely to be propelled by a lower interest rate environment and increased investment commitments from family offices in the region,” Pais adds.