Private equity and venture capital investments in Asia-Pacific excluding Japan continued on a downward trajectory as 2022 closed.
Deals totaled $5.39 billion across 42 announced and completed transactions in the fourth quarter of 2022 compared to $20.07 billion across 79 transactions during the same period in 2021, according to data from S&P Global Market Intelligence.
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Deal value and deal volume have been slowing since the third quarter of 2021, the period that saw the highest private equity investments in the region in the last two years.
In 2022, aggregate transaction value and the actual number of deals fell to their lowest levels in the last five years at $35.43 billion and 208 transactions, respectively. Activity peaked in 2021 when private equity transacted 347 deals valued at $74.08 billion.
China investments decline
The 2022 slowdown in Asia-Pacific deals is linked to a sharp decline in investment driven by a pullback of U.S. institutional investors in China, Cate Ambrose, CEO of the Global Private Capital Association, said in an interview with Market Intelligence. Investment capital is being primarily reallocated to India.
"There is a lot of excitement about India right now in terms of the scale of the market," Ambrose said.
Investors see technology companies in India and Southeast Asia, in particular, as quality investments more favorably valued compared to counterparts in the U.S. or China, Ambrose added.
Private equity involvement in M&A activity
Overall M&A activity in Asia-Pacific recorded a total value of $203.98 billion in the fourth quarter of 2022, an increase from $179 billion in the same period in 2021. Transactions with private equity involvement dropped to 2.7% of the total M&A value, compared to 12.6% in the fourth quarter of 2021.
Biggest deals
EQT AB (publ)'s US$7.45 billion buyout of Hong Kong-based firm Baring Private Equity Asia was the biggest transaction with private equity involvement in 2022. Morgan Stanley & Co. International PLC was the financial adviser for the buyer, while The Goldman Sachs Group Inc. and JPMorgan Chase & Co. were advisers to Baring for the deal.
The Hina Group and Industrial Bank Co. Ltd. Shanghai Branch's bid to acquire software services company VNET Group Inc. for $2.87 billion ranked second. Kroll Securities LLC and Kroll LLC were the financial advisers for VNET.
In the fourth quarter of 2022, MBK Partners' $1.82 billion acquisition of Seoul, South Korea-based Medit Corp., which manufactures technology solutions for dental clinics and labs, was the top transaction.
