Beyond the buyout is our weekly newsletter dedicated to private equity developments across Asia Pacific, with a special focus on Southeast Asia.
We dive into the exit bonanza that we see this week—something that the industry has been anticipating since the start of the year amid pressure to deliver on distributions.
But first we look at the growing clout of sovereign wealth funds (SWFs) from the Middle East, amid a broader contraction in private capital allocations to Asia.
Gulf SWFs take the lead
Gulf SWFs, after decades of amassing oil revenues, have emerged as the largest and most active investors globally, even as the emirates are dedicating much of that capital, while at the same time leveraging global equity and expertise, towards transforming their own economies.
With their vast resources, the Gulf SWFs have been racing to expand, deploying into managers and startups across the private capital spectrum.
This week, Saudi Arabia’s sovereign wealth fund PIF said it would anchor Goldman Sachs’s new funds focused on the kingdom and the Gulf Cooperation Council (GCC) countries. The new private credit and public equity vehicles will also raise capital from international investors, with significant allocations to Saudi Arabia.
It is part of the kingdom’s drive to transform its economy by leveraging global capital and industry. In February, for instance, ewpartners, a GP backed by PIF, led an investment of $48 million into Saudi Arabian fintech Valuable Capital Group—a deal the managers said aligned with the kingdom’s goal of advancing fintech development and economic diversification.
A year ago, Qatar Investment Authority launched a $1 billion Fund-of-Funds programme targeting regional and international venture funds, focusing on the tech and healthcare sectors, to boost funding for startups and the development of the emirate’s VC ecosystem.
The programme has since enlisted six VC firms, including the Singapore and US-based B Capital and the UK’s Utopia Capital Management. On its part, Utopia has set up a new Doha office, from where it will look at funding startups in Southeast Asia and the Middle East.
For 2024, Mubadala Investment Company emerged as the most active global SWF, pipping PIF, according to data from Global SWF, a consultancy and research firm that tracks the world’s SWFs.
During the year, Mubadala and its subsidiaries deployed $29.2 billion, about two-thirds more than the year before. In December, Mubadala’s CEO and managing director Khaldoon Al Mubarak said at the Milken Institute summit in Abu Dhabi that it was under-invested in Asia, and would be focusing on the region given its growth stories.
Abu Dhabi-backed state funds have invested in venture deals in SE Asia, including in Singapore’s AirCarbon, Indonesia’s GoTo, and the ill-fated eFishery.
Mubadala is also collaborating with Singapore’s Temasek-owned Seviora Holdings, to pursue co-investments and other strategic ventures globally, including in Singapore and the Gulf.
With their sizable assets and deployments, the Gulf SWFs are altering the course of global capital flows, and driving growth in priority sectors. But it remains to be seen what the broader implications of their growing clout are.
Fund flow trends
Asia-based funds may have a comparatively lower share of allocated global capital in 2024, but investors in the region have emerged as some of the strongest supporters of global private markets in 2024, according to a market overview by advisory firm Capstone Partners.
There is also increasing interest from LPs in Japan-focused funds, and Japanese LPs looking to invest particularly in North America, as well as Europe.
Outside of those markets, however, the outlook is weaker, as LPs consolidate investments into larger regional vehicles and selectively add single-country-focused funds in Japan, India, and Australia.
Geopolitical shifts and the ex-China allocation strategy are driving demand from European and U.S. investors. But it is unclear how much this will drive Asia’s overall attraction for private capital.
The fundraising landscape remains tough. Per Preqin data, 3,320 funds closed globally in 2024, compared to 4,375 in 2023, and 6,790 in 2022. And global capital raised was just over $1.1 trillion in 2024 compared to $1.5 trillion in 2023, and $1.7 trillion in 2022.
One factor could be that several mega funds were raised in preceding years. Still, in 2024, over 17,000 funds were targeting raising over $3.3 trillion, surpassing both 2023 and 2022 levels, particularly in the mid-and lower mid-market segments. GPs, mindful of market conditions, have often opted for smaller fund targets, carefully timing their launches, the Capstone report added.
For GPs, it is now about delivering exits, maintaining strong performance, and ensuring transparent communication with the LPs.
Exit rebound?
Will a handful of outsized winners drive the region’s return profile?
This week, Navis Capital Partners sold Eastern Grocer, the operator of Everrise supermarkets in Malaysia, to the region’s superapp Grab.
Indonesian gummy bear maker Yupi is contemplating an IPO that values it at roughly $1.2 billion. Yupi was owned by Indonesian investment firm Mahanusa Capital and the local insurance-to-real estate conglomerate Gunung Sewu. Meanwhile, Affinity Equity Partners, which invested in the company last year, has already divested Malaysia’s Island Hospital and Indonesian herbal medicine firm Sido Muncul, for 3x and 2x returns, respectively.
Last year, SE Asia saw $5.9 billion in PE-backed exits compared with $3.3 billion in 2023, as deal volume more than doubled to 27 deals, per EY data. However, the industry should temper its excitement before the region can demonstrate appetite for sizable transactions.
There is a slate of multi-billion dollar PE-backed companies lining up for exits, namely GCash, Maya (formerly Voyager Innovations), and Metro Pacific Hospital in the Philippines, and MoMo in Vietnam.
Market chatter suggests that some of these businesses have drawn interest from potential bidders, but the real question is who will have the capacity to absorb these assets. Even the region’s secondary market has been slower than expected and is unlikely to see a meaningful recovery unless the concerns around valuation expectations and asset quality are resolved.
Top PE developments in APAC
Hong Kong’s government-owned investment fund, HKIC, recently invested in Baidu-backed Chinese chip design house StarFive. This follows the city’s plans outlined in the Budget to support the development of AI, including open-source technologies.
Meanwhile in India, Blackstone has dropped out of the race to pick up a minority stake in the snacks business of Haldiram’s. Temasek reportedly is still in the race to acquire a minority stake in Haldiram’s.
Hillhouse Investment, which has been investing in Japan since 2009, is looking to deploy $1-2 billion annually in the country and roughly double its head count by year-end, Reuters reported.
In a significant deal in Japan, Trial Holdings said it would spend 382.6 billion yen ($2.55 billion) to acquire the Seiyu supermarket chain controlled by KKR, which bought a 65% stake in the chain from Walmart in 2021. Subsequently, it acquired an additional 20% stake from Rakuten in 2023. Walmart will also sell its 15% stake to Trial Holdings.
Blackstone has picked up a 60% stake in Japanese drug trial company CMIC this week as PE players continue to bet on healthcare deals in Japan, cashing in on its ageing population and drug innovations.
