Asia, and Southeast Asia in particular, is likely to become a more attractive market for buyouts in the next three years, according to a recent survey by Coller Capital.
The “Private Equity Barometer” survey is a twice-yearly overview of the plans and opinions of 112 private equity investors, or limited partnerships (LPs), based in North America, Europe, the Middle East, and Asia Pacific.
It found that investors have a positive outlook for buyout deals in the Asia Pacific. And Southeast Asia, a region of more than 600 million people and a combined gross domestic product of about $3 trillion, is looking particularly attractive.
“A net balance of a quarter of LPs think that Southeast Asia will be more attractive for buyouts in the next three years,” the report said.
The world’s second- and third-largest economies, China and Japan, also had a net positive balance from LPs, although not as positive as Southeast Asia. LPs viewed China as 14 percent more attractive for buyouts, and Japan as 11 percent more attractive. Australasia had a net positive balance of 8 percent, and India and South Korea both showed a smaller net positive balance, totaling 3 percent each.
While Asia Pacific is looking more attractive for buyout deals, most LPs think the North American buyout market is overheating. More than 60 percent of LPs believe that too many private equity firms, also known as general partnerships (GPs), are chasing too few deals there. Half of LPs think the same about the European market.
By contrast, just a quarter of LPs have that view of the Asia Pacific market, the report said. “In fact, a third of LPs believe the region has a different problem: not enough high-quality buyout GPs.”