Private equity deal value in Asia Pacific fell 44% year-on-year to $198 billion in 2022, after two years of record dealmaking, according to a Bain & Company report.
Slower economic growth, declining consumer confidence, falling manufacturing output, high inflation, and mounting global and regional uncertainties caused the drop, the global consultancy concluded in its Asia Pacific Private Equity Report 2023.
Deal value declined between 25% and 53% across the region, with Greater China and Southeast Asia experiencing the greatest plunge, at 53% and 52% respectively. China’s zero-Covid strategy, geopolitical tension, and regulatory crackdowns on the tech industry contributed to squelched investor sentiment. In Southeast Asia, fewer growth deals were the culprit, the report said.
"The declines in deal value, exits and fundraising in 2022 should not be a surprise,” Kiki Yang, co-head of Bain’s Asia Pacific private equity practice, said in a statement. “In fact, conditions were set for a perfect storm. Investor exuberance and a superabundance of global capital helped propel Asia Pacific deal value to an extraordinary high in 2021. As economic forces battered the market in 2022, investors retreated and deal value fell back to the level of 2020."
Greater China still holds the majority of the region's total deal value, though it fell to 31%, a 9-year low. India and Australia-New Zealand increased their shares to 23% and 19%, respectively.
Growth deals outpaced buyouts in 2022, but the total value of large growth deals above $200 million dropped 45% from 2021, according to the report.