SINGAPORE : More global private equity firms have been setting up offices in Southeast Asia, and the funds raised in the region are expected to grow at an annual rate of 30 per cent over the next three years.
Private equity investors are also likely to cast the spotlight on Singapore, Indonesia and China.
Things are heating up in Singapore's private equity space.
Singapore-based venture capital and private equity firms managed a total of S$26.5 billion last year, according to a survey by the Singapore Venture Capital & Private Equity Association (SVCA) and PricewaterhouseCoopers (PwC). Out of this, S$2.3 billion was invested in Singapore.
US private equity firm Kohlberg Kravis Roberts (KKR) opened its Singapore office in October, with plans to inject more than US$1 billion in Southeast Asia over the next five years.
Indonesian private equity firm Northstar Group has also made its first foray into the Singapore market.
It recently acquired a 50 per cent stake in Nera Telecommunications, through its newly-incorporated unitE, Asia Systems.
Northstar has invested close to US$2 billion with co-investors in the Southeast Asian region.
Experts have said Singapore's location makes it a natural platform for global investors to set up base.
Eugene Wong, chairman of the Singapore Venture Capital and Private Equity Association, said: "Singapore is becoming like the Asia equivalent of NYC and Silicon Valley, so we can play the role of a New York for private equity, the big M&A private equity players, and the Silicon Valley tech region for high-tech high-growth companies. So for players in Singapore, one advantage is that we can also invest in China, Korea, and New Zealand. "
While private equity transactions in Southeast Asia have totalled US$3.6 billion so far this year, investing in this region is not without its challenges.
Jack Wang, a partner at Lexico, said: "US private equity firms are familiar with corporate governance. And in Asia, personal relationships are the predominant factors when it comes to deal sourcing and deal execution, so a change in mindset, lots of focus on the personal element...this is particularly true in Indonesia, most of the existing companies are owned by family business, and in China as well, politics is a big factor. "
According to research by the Singapore Venture Capitalist Association, approximately US$6.4 billion worth of funds will be raised in Southeast Asia by the end of 2012. And with the rising affluence in this region, market watchers have said they expect more private equity firms from the US to invest in the telecoms, commodities and consumer sectors in Southeast Asia.
- CNA/ms
Global private equity firms eyeing Southeast Asia
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Global private equity firms eyeing Southeast Asia
