Venture Capital, Private Equity Investment in ASEAN Booming

Southeast Asia has been attracting more and more private equity and
venture capital investors over the past years and is now poised to enter a
new phase of growth as the region’s investment has reached critical mass,
Bain & Company research showed in November.

Last year, the number of recorded venture capital deals jumped to 524,
four times compared to 2012. Singapore, Indonesia, Myanmar, Thailand,
the Philippines, and Vietnam were the main destinations of private equity
and venture capital investments in the region.

Private equity deal value in Southeast Asian surged by 75 percent in 2017
from 2016 to reach US$15 billion last year, according to Bain & Company.
The research suggests that total deal value over the next five years is
likely to reach US$70 billion, which would be double the level of the
previous five years.

Technology has become the leading sector for investment in the region,
accounting for 40 percent of the total deal count in 2017. More than 60
percent of private equity and venture capital investors in Southeast Asia
cite technology as their main target for 2018–19, and fintech is the largest
most attractive sub-sector, according to Bain & Company’s survey. Almost
90 percent of investors said the hottest Southeast Asian markets in
2018–19 outside of investment hub Singapore will be Indonesia and
Vietnam.

“Progress by the 10-member Association of Southeast Asian Nations
(ASEAN) creating a single Southeast Asian trade bloc continues to
increase the attractiveness of the region for companies and investors. The
existing trade bloc agreement reduces tariffs on goods and services and
creates a common trade zone that operates more like a unified economy
than a patchwork of national economies. Importantly, deeper integration
of the ASEAN market encourages companies to expand across borders,
accelerating their growth,” Bain & Company’s Suvir Varma and Alex
Boulton wrote in the research.

“Investing in Southeast Asia is taking off, but new challenges will require
investors to navigate adroitly. Those who build regional businesses, secure
top talent, improve commercial excellence and harness digital
technologies will be best positioned to produce the solid returns they’ve
long been anticipating,” they noted.