Southeast Asia saw steady private equity (PE) deal activity in Q3 2024

• US$6.1b was deployed across 20 PE-backed deals in Q3 2024, compared with US$5.6b from 28 PE-backed deals in Q2 2024
• Real estate deals accounted for 40% of PE investments, followed by health care (18%) and infrastructure (16%)
• Muted PE-backed exit activity in Q3 2024; US Federal Reserve rate cuts expected to drive IPO interest going forward

Southeast Asia (SEA) saw steady private equity (PE) deal activity in the Q3 2024, with 20 deals deploying US$6.1b compared with 28 deals deploying US$5.6b in Q2 2024. 

The real estate sector accounted for some 40% of PE deal value in SEA in Q3 2024, as the region continues to attract investor attention in real estate, particularly with the anticipation of lower interest rates. This is followed by the health care and infrastructure sectors, which constituted about 18% and 16% of the total PE deal value respectively. In addition, SEA is attracting significant investments to address financing gaps to achieve the goal of clean energy transition and carbon neutrality by 2025.

This is according to the EY Quarterly Private Equity Update: Asean (Q3 2024), which provides a quarterly roundup of the PE deals along with capital activities across major sectors in SEA.

Luke Pais, EY Asia-Pacific Private Equity 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 reveals that a broader base of deal activity will be observed in the period ahead.”

Muted PE-backed exit activity in Q3 2024; Fed cuts expected to drive IPO interest going forward

For exits, while Q3 2024 saw a hike in exit value of US$4.1b, compared to US$1.1b in the previous quarter, deal volume remained low with nine PE-backed exits. However, the US Federal Reserve’s 50-basis-point rate cut in late September 2024, with expectation of a further continued lowering of interest rates, may benefit the SEA and Asia-Pacific IPO markets by improving investor sentiments, lowering borrowing costs and enhancing equity valuations. This is expected to help to counter some of the prevailing headwinds in the region recently.

For fundraising, there were two SEA-based PE funds closes in the Q3 2024, raising a cumulative capital of US$800m, compared with US$5.4b in the previous quarter. Also, PE deals accounted for some 11% of overall M&A deal volume in SEA during Q3 2024, compared with 16% in Q2 2024. 

The quarterly 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.

Pais concludes:
“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.”

Notes to editors

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