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Can Southeast Asia sustain its private equity and venture capital boom?

Suvir Varma, Alex Boulton & Francesco Cigala
Suvir Varma, Alex Boulton & Francesco Cigala1/21/2019 08:00 AM GMT+08  • 8 min read
Can Southeast Asia sustain its private equity and venture capital boom?
SINGAPORE (Jan 21): Venture capital and private equity investment in Southeast Asia has soared to record levels as scores of new investors pour into the region. In 2017, the number of recorded venture capital deals rose to 524, four times the level of 201
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SINGAPORE (Jan 21): Venture capital and private equity investment in Southeast Asia has soared to record levels as scores of new investors pour into the region. In 2017, the number of recorded venture capital deals rose to 524, four times the level of 2012, and private equity deal value rose 75% to US$15 billion, breaking out of a decade-long phase of flat growth.

Suddenly, all signs are pointing up. Technology companies attracted the bulk of new capital, rising to 40% of deal count in 2017 from 20% in 2014. Southeast Asia-dedicated funds’ dry powder — committed but unspent capital — has more than doubled since 2012. The region also has produced its first set of unicorns — new companies that rapidly achieve market valuations of at least US$1 billion ($1.35 billion). Since 2012, 10 unicorns, including Grab, Go-Jek and Traveloka, have created a combined market value of US$34 billion, ranking Southeast Asia No 3 in Asia-Pacific, behind only China and India.

Can Southeast Asia sustain the new momentum? We see the conditions in place for a long-term investment boom. The region’s venture and private equity ecosystems have developed critical mass and are entering a new phase of growth. Our research shows private equity deal value over the next five years is likely to total US$70 billion — double the level of the previous five years. By 2024, we expect the region to produce at least 10 new unicorns.

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