[SINGAPORE] Private equity (PE) players have seen the lack of exit opportunities in the first half of 2025 contribute to a decline in private dealmaking. A revival in initial public offerings (IPOs) across South-east Asia – seen as a key avenue for exiting a PE investment – may spark some optimism, but would it be enough to lift the sector?
In the PE market, participants are looking back wistfully to the so-called “roaring” 2021, when investors quickly rebounded from the pandemic-driven lull. Encouraged by low interest rates, fundraising set a record amid a frenetic pace in dealmaking.
In the US – the world’s biggest PE market – the number of deals jumped 87 per cent in 2021 from 2020, to top 9,500. Total deal values rose to around US$1.3 trillion.
While South-east Asia is a much smaller market, the numbers notched in 2021 were not to be sniffed at. In a 2022 report, Bain & Co said PE deal values leapt 143 per cent to hit a record high of US$25 billion, driven by the likes of Temasek’s US$4.3 billion investment in J&T Express. The number of transactions surged 81 per cent to 201. Bain has since updated these figures to US$27 billion and 211, respectively.
A pick-up in 2024’s numbers fuelled optimism for a better 2025.
But that has not panned out.
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PE capital is stuck
A sharp downturn in PE dealmaking in South-east Asia in H1 2025 has understandably led market participants to dial back their optimism for the rest of the year.
There has been a decline in the number of IPOs on major South-east Asian exchanges as well. A recent Deloitte report showed 53 listings in H1 2025 across Indonesia, Malaysia, Singapore, Thailand, the Philippines and Vietnam, down from 64 in the same period in the previous year.
With fewer IPOs, general partners (GPs), as PE fund managers are known, have to find other ways to offload investments made earlier, usually five to seven years ago.
Without the ability to exit via IPOs, GPs may find it harder to return the invested capital, plus yield, to investors who are known as limited partners (LPs) in PE. The resulting distribution drought turns into a vicious circle of capital being stuck in older vintage investments, with less reinvested into new PE funds or ventures.
South-east Asia is not alone in this predicament. In the US, the ratio of investments to exits has reached 3.14, the highest in a decade, according to data provider PitchBook. This means that PE firms enter about three investments for every venture they exit, pointing to the dearth of exit opportunities as tariff and trade tensions impact deal activity, said PitchBook in a Jul 23 report.
Not all hope is lost
Still, the outlook for the rest of 2025 may not be that dire, if one goes by the recent flurry of IPO activity in the key South-east Asian bourses.
In Singapore, the IPO pipeline is looking considerably brighter after a dour H1. In July alone, there have been four listings – Info-Tech Systems, NTT DC Real Estate Investment Trust (Reit), China Medical System and Lum Chang Creations.
A few more, including Centurion Accommodation Reit, Dezign Format and Coliwoo Group, have signalled their intent to list before the end of the year. That compares with just one listing by car dealer Vin’s Holdings during the first half.
It is a nice contrast to the first six months as well, when at least 16 companies announced delistings from the Singapore Exchange. These included Catalist-listed nursing operator Econ Healthcare, which was taken private by American PE firm TPG in a deal worth nearly S$88 million.
The measures introduced by the review group of the Monetary Authority of Singapore – specifically the 20 per cent tax rebate for primary listings and the S$5 billion equity market initiative – also “send a strong signal of intent to revitalise the market”, Angelia Zhang, transactions accounting support partner at Deloitte Singapore, told The Business Times.
“These policy moves, coupled with a growing awareness of the need for early IPO readiness, could help unlock opportunities for both founders and investors looking for credible exit routes,” she added.
In Indonesia, home to South-east Asia’s biggest stock exchange by market capitalisation, a 500 per cent surge in the share price of the country’s largest IPO this year has captured the public’s imagination.
The listing of Chandra Daya Investasi on Jul 9 – an investment management company with a diversified portfolio across energy, ports and logistics – is the latest IPO from local tycoon Prajogo Pangestu’s business empire.
Incidentally, the Indonesian stock market is also where the first PE-backed IPO in South-east Asia since 2023 occurred. When gummy candy producer Yupi Indo Jelly Gum raised US$123 million from its March IPO, Hong Kong-based PE firm Affinity Equity Partners concurrently bought the remaining 90 per cent stake in the company from its previous owner.
This bodes well for the rest of 2025 and even into 2026, with “several PE-backed companies actively preparing for potential listings” in South-east Asia, said Sheetal Sandhu, partner at Virtus Law.
And if the trend of more IPOs continues, “we could see a virtuous (circle) start to take shape. Successful exits would help ease the ‘distribution drought’ that’s been affecting LPs, which in turn could free up more capital for new investments. That would likely drive greater competition and innovation in the market, support healthier valuations, and attract new players to the region”, she added.
As the saying goes, a rising tide lifts all boats. While South-east Asia’s PE market would need more than a jolt from an IPO revival to come even close to matching the record wave in “roaring” 2021, a substantial increase in the total deal values would help boost sentiment, and perhaps pave a more concrete path to return to those lofty levels in 2026.