PE Dealmaking at Lowest in Five Years but Set to Rebound – S&P Global Report

Singapore-based Morrison Foerster Private Equity partner Steven Tran was quoted in a recent article, “PE Dealmaking at Lowest in Five Years but Set to Rebound – S&P Global Report,” published by FinanceAsia.

The article highlights how private equity activity in Asia could see a possible revival in 2023, despite dealmaking hitting its lowest level in 2022.

According to Steven, “The investment thesis for investing in Asia remains intact and we anticipate an uptick in overall PE deal activity across the region.”

Sectors to watch this year include agriculture and AgriTech, FinTech, artificial intelligence (AI), and healthcare, as well as traditional consumer-led sectors.

“Consumer, manufacturing, and industrials sectors will feature prominently on sponsors’ radars as multinational corporations are shifting manufacturing and supply chains away from China to countries such as Vietnam, Indonesia, and Bangladesh.”

Steve noted, “With macroeconomic headwinds anticipated in 2023, but continued stores of dry powder, we expect private equity sponsors to seek to take advantage of distressed situations throughout 2023.”

Similarly, he expects PE funds to pursue more structured equity investments to better protect against downside risk.

Besides India, Steven anticipates that Singapore, Indonesia, and Vietnam will be the preferred investment destinations for financial sponsors this year. “Southeast Asia will continue to be one of the biggest winners here,” Steven says.

However, he foresees a possible return of capital to China following the lifting of its COVID-19 restrictions, which “may result in global funds taking a 180-degree turn to significantly increase allocations to China despite continued geopolitical rumbling.”

On key themes to note for global PE investing, Steven says, “We anticipate that sponsors will continue to increase their focus on ESG in the coming years, both from a diligence perspective when assessing an investment opportunity, as well as requiring the assets they invest in to have a clear ESG component.”

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