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Indonesia’s private equity funding to bounce back after bleak 2020: Bain & Co.
After the dip in private equity investments and exits last year due to the pandemic, Indonesia looks to be on the path to recovery as interest in tech companies and special purpose acquisition companies (SPAC) could boost funding and initial public offerings (IPOs) this year, according to business consultancy firm Bain & Company.
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Indonesia saw its private equity investment deals contract moderately when compared with other countries in Southeast Asia, a Bain & Company study found. (Shutterstock/File)
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ast year, Indonesia and other Southeast Asian nations saw their private equity (PE) investments and exits dip as a result the COVID-19 pandemic. However, the outlook for funding this year may be more hopeful, with a study revealing recovery is likely to come from heightened interest in the internet economy and the opportunities to go public with a blank-check company.
Based on the 2021 “Southeast Asia Private Equity Report”, commissioned by Singapore-based business consultancy firm Bain & Company, deal activity and value in the region dropped off considerably when compared with other countries in the Asia-Pacific region because of COVID-19.
Investment activity in Southeast Asia went down from 115 deals in 2019 to 106 last year. The region also saw its deal value decrease by 25 percent from US$12 billion to $9 billion over the same period.
“This great level of slowdown was driven by unique regional characteristics. First, the difficulty of completing due diligence when cross-geographic travel is restricted, [given that] Southeast Asia is a collection of countries,” Usman Akhtar, a partner in Bain & Company’s private equity practice, said in a recent press conference.
He also said that the different responses to COVID-19 among Southeast Asian nations had made it difficult for investors to formulate new investment plans.
Indonesia, the region’s largest economy and one of its fastest-growing markets for the digital economy, saw its PE investment deals contract moderately compared with other countries. Its investment deals were down by 11 percent in 2020 compared with the last five-year average, while investment deal value was down 34 percent over the same period.
By comparison, Malaysia saw its investment deal count go down 55 percent and its investment deal contracting by 89 percent.
