Deal making is back in Southeast Asia

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Deal making is back. Not so much in the US or in Europe, but in Southeast Asia. Some of the biggest names in private equity have recently been racing to set up business in the region and to put their surplus cash to work. They are all drawn by an area that is still defying the global economic slowdown by delivering solid economic growth as compared to Europe, the US and Japan, and, increasingly, India and China which are now also facing a slowdown.

By Arno Maierbrugger

The situation has turned after private equity investors moved away when the Asian financial crisis gripped the region in 1997 and 1998. Today, private equity deals are back to pre-crisis levels, expected to reach $5.3 billion in 2012 before staging a rebound over the next two years.

US-based Kohlberg Kravis Roberts & Co (KKR) was the first to name it and said it will invest more than $1bn in Southeast Asian over the next five years as it sees increasing opportunities especially in Thailand, Vietnam and the Philippines. KKR, which has $61.5 billion in assets under management globally, sees investment opportunities in the consumer sector, the financial services sector and the resources sector such as agricultural products, palm oils, minerals and metals in the region and in October 2012 officially opened an office in Singapore to serve as the regional hub for investments.

Rival firms Blackstone and General Atlantic also opened offices in the city state this year, and TPG, Navis Capital Partners, Capstone and Carlyle Group said they are going to step up their investment activity in the region. They are looking for buyout deals and start-up finance opportunities as well as joint-ventures with established local investment firms, which include big government funds like the Government of Singapore Investment Corp or Malaysia’s Khazanah Nasional, as well as newly formed regional firms such as Axiom Asia Private Capital, Lombard or frontier market investors such as Silk Road Management, Indochina Capital and Leopard Capital, the latter two formed by Swiss investment guru Marc Faber. Investors from the Gulf are also among the players, e.g., Dubai’s Abraaj Capital.

Good deals are there to find. Given the fact that many large corporations and family businesses in Southeast Asia are in a process of diversification and re-orientation, there are significant opportunities for spin-offs and other bargains. The rapid growth has also fuelled demand for greenfield operations and start-ups of many kinds, which are also supported by Southeast Asian governments and their Boards of Investment.

The time window won’t be open eternally. Before the Asean Economic Community kicks off in 2016, investments should ideally get wrapped up to capitalise on the first-mover advantage.

This comment is Inside investor’s weekly contribution to Qatar’s leading newspaper Gulf Times and is published every Sunday.

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Reading Time: 2 minutes

Deal making is back. Not so much in the US or in Europe, but in Southeast Asia. Some of the biggest names in private equity have recently been racing to set up business in the region and to put their surplus cash to work. They are all drawn by an area that is still defying the global economic slowdown by delivering solid economic growth as compared to Europe, the US and Japan, and, increasingly, India and China which are now also facing a slowdown.

Reading Time: 2 minutes

Deal making is back. Not so much in the US or in Europe, but in Southeast Asia. Some of the biggest names in private equity have recently been racing to set up business in the region and to put their surplus cash to work. They are all drawn by an area that is still defying the global economic slowdown by delivering solid economic growth as compared to Europe, the US and Japan, and, increasingly, India and China which are now also facing a slowdown.

By Arno Maierbrugger

The situation has turned after private equity investors moved away when the Asian financial crisis gripped the region in 1997 and 1998. Today, private equity deals are back to pre-crisis levels, expected to reach $5.3 billion in 2012 before staging a rebound over the next two years.

US-based Kohlberg Kravis Roberts & Co (KKR) was the first to name it and said it will invest more than $1bn in Southeast Asian over the next five years as it sees increasing opportunities especially in Thailand, Vietnam and the Philippines. KKR, which has $61.5 billion in assets under management globally, sees investment opportunities in the consumer sector, the financial services sector and the resources sector such as agricultural products, palm oils, minerals and metals in the region and in October 2012 officially opened an office in Singapore to serve as the regional hub for investments.

Rival firms Blackstone and General Atlantic also opened offices in the city state this year, and TPG, Navis Capital Partners, Capstone and Carlyle Group said they are going to step up their investment activity in the region. They are looking for buyout deals and start-up finance opportunities as well as joint-ventures with established local investment firms, which include big government funds like the Government of Singapore Investment Corp or Malaysia’s Khazanah Nasional, as well as newly formed regional firms such as Axiom Asia Private Capital, Lombard or frontier market investors such as Silk Road Management, Indochina Capital and Leopard Capital, the latter two formed by Swiss investment guru Marc Faber. Investors from the Gulf are also among the players, e.g., Dubai’s Abraaj Capital.

Good deals are there to find. Given the fact that many large corporations and family businesses in Southeast Asia are in a process of diversification and re-orientation, there are significant opportunities for spin-offs and other bargains. The rapid growth has also fuelled demand for greenfield operations and start-ups of many kinds, which are also supported by Southeast Asian governments and their Boards of Investment.

The time window won’t be open eternally. Before the Asean Economic Community kicks off in 2016, investments should ideally get wrapped up to capitalise on the first-mover advantage.

This comment is Inside investor’s weekly contribution to Qatar’s leading newspaper Gulf Times and is published every Sunday.

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