Private equity deals and exits in Asia-Pacific reach new highs

After a two-year slump, Asia Pacific’s private equity (PE) sector registered its best-ever performance in 2014, with both deal values and the exit activity not only rebounding, but soaring to a new record of $81 billion and $111 billion, respectively, Bain & Company said in a report.

According to the report from the rom management consulting firm, the deal value soared 61.72 per cent, from $50 billion in 2013. Meanwhile the exit value doubled from $51 billion last year. (See Figure 1.1) The rebound stemmed, largely, from returns that came from the massive transactions of the leading PE firms – sometimes in partnership with large sovereign wealth funds or other Limited Partners.

Going forward, Bain cited that the higher asset prices and tough competition will be the main challenges that could hamper the positive momentum on the deals side. Meanwhile, exit activity in 2015 will largely depend on continued strength in the region’s fickle equity markets.

Since the slump began in 2011, the PE industry’s recovery and long-term growth in Asia Pacific has depended on two factors – one is General partners (GPs) finding innovative ways to provide more return on capital to the investors, and the other is the steadily improving returns on investment.