<article><p>It has been a challenging year so far for Southeast Asia-focused private equity (PE) funds, with fewer securing final closes and many falling short of their original fundraising targets.</p></article>

<p>It has been a challenging year so far for Southeast Asia-focused private equity (PE) funds, with fewer securing final closes and many falling short of their original fundraising targets.</p>
<p>According to <a href="https://www.dealstreetasia.com/reports/private-equity-se-asia-h1-2023">DealStreetAsia- DATA <i>VANTAGE&#8217;s</i> latest report</a>, the first half of 2023 only saw three SE Asia-focused PE funds reach a final close after securing $452 million in total proceeds. This pales in comparison with the prior six months when five funds had garnered $1.96 billion in capital commitments.</p>
<p>Whether steered by industry veterans or newcomers, PE funds have faced challenges meeting their fundraising goals, finds the report titled <em><a href="https://www.dealstreetasia.com/reports/private-equity-se-asia-h1-2023">Private Equity in SE Asia: H1 2023 Review</a>. </em></p>
<p>In June, Switzerland&#8217;s SUSI Partners&#8217;s Asia Energy Transition Fund (SEATF) reported a final close of $120 million, missing its goal of $250 million. Singapore&#8217;s KV Asia Capital collected $202.6 million for its fifth fund in May, short of the desired $300 million.</p>
<p>In light of the lower-than-expected fundraising, Wymen Chan, the head of Asia at SUSI Partners, said his company had made some adjustments to ensure good management of concentration risks for SEATF but will maintain its overall strategy and approach.</p>
<p>&#8220;The focus is still on greenfield development of renewables, energy efficiency, and energy storage assets and portfolios across Southeast Asia, but we will be able to offer more co-investment opportunities to our existing LPs, especially when we enter construction phases for the projects,&#8221; Chan said.</p>
<figure id="attachment_359259" aria-describedby="caption-attachment-359259" style="width: 1280px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" class="size-full wp-image-359259" src="https://media.dealstreetasia.com/uploads/2023/08/Picture1-1.png?resize=640,265" alt="" srcset="https://media.dealstreetasia.com/uploads/2023/08/Picture1-1.png?w=1280 1280w, https://media.dealstreetasia.com/uploads/2023/08/Picture1-1.png?resize=300,124 300w, https://media.dealstreetasia.com/uploads/2023/08/Picture1-1.png?resize=1024,424 1024w, https://media.dealstreetasia.com/uploads/2023/08/Picture1-1.png?resize=768,318 768w" sizes="(max-width: 1280px) 100vw, 1280px" data-recalc-dims="1" /><figcaption id="caption-attachment-359259" class="wp-caption-text">Source: DATA <em>VANTAGE</em></figcaption></figure>
<h3>High-quality pipeline</h3>
<p>The first half performance remains commendable given the prevailing global monetary tightening and supply chain disruptions. The numbers stand out especially when compared to the same period last year, when no SE Asia-focused funds had reported a final close.</p>
<p>The year-to-date performance also received a significant boost earlier this month, with Growtheum Capital announcing the full close of its debut fund at $567 million, albeit below its target.</p>
<p>Joshua Morris, CEO of Emerging Markets Investment Advisers, views the current regional economic conditions positively, noting that the reduced valuation expectations bolster his confidence in a high-quality deal pipeline.</p>
<p>&#8220;Although we&#8217;ll look at it deal by deal, we don&#8217;t see a blanket need to reassess potential arising from the regional conditions at this point, and I would see our projections reflecting a pace outlined at the start of the fund and an opportunity to be quite selective across the geographies we invest in,&#8221; he added.</p>
<p>The current climate has also thrown up new opportunities for specialised funds, particularly those focusing on climate adaptation and healthcare.</p>
<p>&#8220;The post-pandemic world has further validated our thesis of investing in models that offer affordable, accessible, quality and predictable healthcare,&#8221; said Quadria Capital managing partner Amit Varma.</p>
<p>Quadria, he said, is looking beyond just investing in hard infrastructure such as hospitals and pharmacies but also in businesses focusing on preventive care, including diagnostics and consumer healthcare.</p>
<p>With a target to raise $800 million and a $1 billion hard cap, Quadria Capital&#8217;s third investment vehicle for investment in healthcare is among the largest funds currently in the market, allocated evenly for South and Southeast Asia.</p>
<h3>Riding on global disruption</h3>
<p>On a more positive note, the supply of capital for Southeast Asia should benefit from a surge in the number of Asia, Asia Pacific and global funds with a mandate to invest in the region.</p>
<p>Seven of such funds secured a final close in the first half of this year, up from three in the previous semester. The seven funds raised $29.1 billion in combined proceeds, of which $16.5 billion is attributable to the fifteenth global flagship fund of US-based TA Associates.</p>
<p>Data from interim closes held by funds with minority SE Asia allocations further underscores the rising global appetite for regional assets. As of this report&#8217;s publication, 16 such funds have reported interim closes as of August this year. This compares to only seven throughout last year.</p>
<p>The latest flagship fund of Warburg Pincus stands out as the largest fund with minority allocations for Southeast Asia currently in the market. It has a target of $16 billion and has already secured $15.4 billion in January.</p>
<p>Another PE firm, Blackstone, is also nearing the closure of its third Asian real estate fund, having amassed $8.2 billion towards its $9 billion goal.</p>
<p>Beyond these interim closes, global PE firms have introduced six new funds this year with SE Asia mandates, targeting $5.85 billion in proceeds.</p>
<hr />
<p><a href="https://www.dealstreetasia.com/reports/private-equity-se-asia-h1-2023">Private Equity in SE Asia: H1 2023 Review</a> covers fundraising by private equity firms based in Southeast Asia and their regional and global counterparts with a mandate to invest in the region. It offers:</p>
<ul>
<li><span style="font-weight: 400;">Fundraising data for SE Asian PE firms since 2018</span></li>
<li>Fundraising data for Asian, APAC and global funds with SE Asia allocations since 2018</li>
<li>Fundraising milestones across strategies since 2018</li>
<li><span style="font-weight: 400;">List of funds currently in the market  </span></li>
<li><span style="font-weight: 400;">Insights from prominent investors on the region&#8217;s PE landscape</span></li>
</ul>
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Deepshikha Monga

The first half of 2023 only saw three SE Asia-focused PE funds reach a final close after securing $452 million in total proceeds.

SE Asia-focused PE funds' H1 performance marred by fewer final closes, missed targets

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SE Asia-focused PE funds' H1 performance marred by fewer final closes, missed targets

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