S&P Global Market Intelligence has reported a significant drop in private equity (PE) and venture capital investments in the Asia-Pacific (APAC) region in Q1 2023, excluding Japan.
Notably, aggregate transaction value was down 45 per cent from the same period in 2022 and stood at $12.12 billion (US$8.09 billion) compared to $22.02 billion (US$14.70 billion) last year. This was on the back of the number of deals having declined from 62 to 43 transactions year on year.
PE transactions were also found to have decreased in proportion to total first-quarter mergers and acquisitions (M&A) in the region, accounting for 9 per cent of the combined value of $142.29 billion (US$95.10 billion). In comparison, M&As in Q2 2022 totalled $171.49 billion (US$114.50 billion), of which 13 per cent had PE involvement.
Based on trends seen in this past quarter, S&P projected that PE deal activity in Asia-Pacific will be on track for a down year.
Consultancy firm Bain & Co added that the PE plummet can be attributed to slower economic growth, declining consumer confidence, falling manufacturing output, high inflation, and heightened geopolitical tensions.
“Investor exuberance and a superabundance of global capital helped propel Asia-Pacific deal value to an extraordinary high in 2021. That set the stage in 2022 for an equally sharp decline as economic forces battered the market, pushing deal value to the level of 2020,” Bain wrote in its Asia-Pacific Private Equity Report 2023.
“The macroeconomic landscape remains unstable, and higher inflation and weaker growth are likely to have a strong impact on investment choices and portfolio performance in the coming year.”
Meanwhile, Australia claimed the third largest deal within the Asia-Pacific in Q1, with TPG Global proposing a $1.8 billion buyout of funeral homes and funeral services company, InvoCare.
However, on Monday, InvoCare announced that TPG had advised that it has withdrawn its indicative proposal of $12.65 cash per share.
In a statement, InvoCare said its board of directors unanimously concluded that TPG’s indicative proposal did not provide “compelling value” for shareholders and therefore access to full due diligence would not be granted to TPG.
According to the funeral services company, it offered TPG the opportunity to access limited, non-public financial information on a non-exclusive basis, to assist in the formulation of a revised proposal. However, TPG did not sign a customary confidentiality agreement to access this information and did not provide InvoCare with a revised proposal.