25 March 2024 – Private equity–backed mergers and acquisitions (M&A) in Asia have seen a sluggish start to the year, marking the lowest first quarter performance in nearly a decade. Economic uncertainties and geopolitical tensions, particularly in China, have dampened dealmaking sentiments across the region.
Preliminary data from LSEG reveals a notable decline in private equity-backed M&A activity in Asia, totaling $13.5 billion from January to March 19. This represents a significant 32% drop compared to the same period last year, marking the weakest first quarter performance since 2015. In contrast, global private equity-backed deals experienced a 21% increase to $136 billion.
Bain & Co consultancy underscores the challenges faced by private equity firms in Asia, despite holding substantial unspent cash reserves. Factors such as sluggish economic growth, market volatility, and geopolitical tensions have hindered investment activities and exits, impacting returns and fund-raising capabilities. Sebastien Lamy, co-head of Bain & Co’s APAC PE practice, emphasizes the urgency for exits amidst extended holding periods and aging portfolios.
Data provider Preqin reports a 51% decline in private equity funds’ exits in Asia through IPOs, trade sales, or secondary buyouts, amounting to $4.9 billion in the first quarter, the lowest since 2014.
China’s economic slowdown and tensions with the U.S. have significantly contributed to the downturn in regional private equity-backed M&A, with deals in China nearly halving in the first quarter.
