Southeast Asia’s private equity and venture capital industry continues to experience fast growth as assets under management (AuM) in the Asean region rose by 8.6% – from $26 billion to $28 billion – in 2018, according to industry data provider, Preqin.
Last year, 17 Asean-focused venture capital funds raised $0.9 billion on aggregate, but buyout and growth fundraising were below historical levels.
During the first six months of 2019 alone, six venture capital funds raised an additional $0.5 billion, with buyout and growth funds already matching last year’s total ($0.8 billion). However, fundraising is considerably lower than its peak of $6.1 billion in 2015.
As of June 2019, there are 70 Asean-focused private equity funds in the market targeting $8.5 billion, according to Preqin.
Ee Fai Kam, head of Asia research and operations at Preqin said investments and appetite are increasing in the region, signalling a bright future for Asean private equity.
“With several large cities on the global stage, and governments that are encouraging entrepreneurship and technological innovation,” said Kam. “These countries make fertile ground for venture capital investment in particular.
“But the fractured regulatory environment can pose a challenge for investment, and investors characterise it as ‘diverse’, ‘fragmented’ and ‘segmented’. Alongside that, political uncertainty in some corners may be putting a brake on larger scale buyout investment, and it remains to be seen whether domestic investors will turn to the asset class in greater numbers,” added Kam.
Despite the positive growth, southeast Asia accounts for less than 1% of the world’s $3.6 trillion of AuM in the private equity and venture capital industry.
The majority (84%) of investors in Asean-focused funds are based outside the region, and just 53% of regionally-based institutional investors are actively allocating to private equity, Preqin found.
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