Exploring private equity opportunities in Asia

Asia Pacific is currently undergoing huge shifts. Given Asia’s size, diversity and the relative maturities of its various economies, some of these trends are idiosyncratic, but others apply more widely. Social, demographic and technological change is evident across much of the region, and the gradual eastward shift in global economic gravity is clear. Private markets experts Titanbay look at what these trends mean for private equity investment in Asia in a new in-depth report.

The rise of Asia Pacific’s middle class is just one significant transformer. According to Bain & Co and Euromonitor, by 2030, Asia Pacific will boast more than three times (amounting to 2.7 billion) the number of middle-class consumers than Europe and North America combined [1]. Technological developments are also rife, and feed into increased consumption in the region. Importantly, Asia Pacific’s adoption of e-commerce has been much swifter than that of the US.

GROWING INVESTOR INTEREST 
The shifts described above, along with sustained industrial development and favourable macro conditions, could facilitate Asia Pacific’s continued economic growth. As the region’s real economy expands, so might the opportunities for those investing in its unlisted companies. With these opportunities come risks, however. Among these are a tense geopolitical backdrop and local currency volatility versus the US dollar. Over the past decade, the best managers have sought to navigate these challenges and generate strong returns from the compelling opportunities available.

Meanwhile, growth in assets under management (AUM) demonstrates both the number of new private market opportunities in Asia and investors’ interest in the region. Over the same ten years, Asia Pacific’s private equity AUM grew at 2.4 times North America’s rate and 3.0 times that of Europe [2]. Its deal value was around $200 billion in 2022 [3]. Although this drop from 2021’s record figure was significant, it was consistent with declines around the globe in the face of prevailing macroeconomic headwinds. And since the most recent figure accounts for only a small proportion of Asia Pacific’s overall GDP, there is considerable scope for further growth in private equity investment in the region. 

DISTINCTIVE CHARACTERISTICS 
Asia’s private markets differ from those in Europe and the US in other ways, too. While the latter two are weighted towards the buyout segment, growth investment accounted for more than half of deal value in Asia Pacific in 2022 [4]. Family-owned and entrepreneur-led businesses dominate the region’s private equity markets. Still, buyout is not an insignificant segment – the market in Asia now accounts for more than 10% of global buyout AUM [5].

To understand more about private market investing in Asia, read Private equity in Asia: an exploration. This latest paper in the Titanbay Insights series examines how transformation is influencing the risks and opportunities that this intriguing, yet intricate, market presents for private equity investors. 

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1. Source: Bain. IMF/OECD/Eurostat/UN/IFS via Euromonitor. 
2. Source: Bain. Asia Pacific Private Equity Report 2022. 
3. Source: Bain. Asia Pacific Private Equity Report 2023. 
4. Source: Bain. Asia Pacific Private Equity Report 2023. 
5. Source: McKinsey Global Private Markets Review 2023

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