TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Can SE Asia sustain its investment boom?
Venture capital and private equity investment in Southeast Asia has soared to record levels as scores of new investors pour into the region.
Change Size
Investment illustration. (Shutterstock/File)
V
enture 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 percent 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 percent of deal count in 2017 from 20 percent 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 $1 billion or more. Since 2012, 10 unicorns, including Grab, Go-Jek and Traveloka, have created a combined market value of $34 billion, ranking Southeast Asia No. 3 in the Asia-Pacific region, 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 $70 billion — double the level of the previous five years. By 2024, we expect the region to produce at least 10 new unicorns.
But surging investment in Southeast Asia means increased competition and higher valuations. To prosper in a changing market, venture capital and private equity investors will need to redouble their focus on value creation and organic growth.
