[SINGAPORE] Private equity (PE) deal value in South-east Asia plunged by nearly half in the first six months of 2025, as macro uncertainties slowed dealmaking after US President Donald Trump’s tariffs dashed the optimism that greeted the year.
Data provided to The Business Times by EY ahead of its report publication showed that the total value of PE investments in the region fell 46.6 per cent in the first half of this year to around US$3.1 billion, compared with that in the same period in 2024. This was despite a 12.5 per cent rise in the number of deals to 36.
As for PE-backed exits, total value slid 40.6 per cent to about US$1.1 billion, along with a 7.1 per cent drop in the number of transactions to 13.
The “marked slowdown” is a possible reflection of “a shift towards more selective dealmaking amid mounting macroeconomic pressures”, Elaine Tan, senior manager at LSEG Deals Intelligence, told BT.
Kerrine Koh, managing director and head of South-east Asia at Hamilton Lane, which counts US$956.1 billion in assets under management and supervision, agreed, adding that the economic climate is making general partners (GPs) or PE fund managers more prudent.
“The South-east Asia region has historically been a more growth and venture-oriented market, which is generally more susceptible to broader market environment and dealmaking sentiments. Deal activity has generally slowed down given the more challenging fundraising environment, and GPs are being more cautious on capital deployment, as well as exit activities,” she said.
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In April, Trump slapped tariffs of up to as high as 49 per cent on members of the Association of Southeast Asian Nations (Asean). Following various changes and pauses, the US president threatened more than a dozen countries with higher levies earlier this month, leading Asean members such as Indonesia, Thailand and Malaysia to engage in a flurry of negotiations.
The twists and turns in the US’ trade policy are extending dealmaking timelines, as investors and PE fund managers try to find the optimal financial model, said market participants.
Mounting pressure on deal teams
“Deal teams are facing mounting pressure to continually update financial models and secure renewed investment committee approvals as market dynamics evolve,” said Johnny Lim, partner and co-chair of global corporate (Asia) at law firm Reed Smith. “This is especially true for transactions exposed to tariffs, where historical valuations are carefully revisited and adjusted to reflect the realities of a shifting tariff environment.”
Even businesses that are not directly affected by the tariffs “need time to consider what may be the knock-on and second-order effects on them”, noted Chiam Tao Koon, head of mergers and acquisitions, South-east Asia, at Ashurst.
This is a near turn-around in sentiment from just six months earlier. Then, industry participants expected 2025 to continue riding a recovery in South-east Asia’s PE market in 2024. According to EY, the number of PE investments soared 103 per cent to 67 last year, the highest since 2018. The value of such investments jumped 221 per cent year on year, to US$15.8 billion. For PE-backed exits, the value of 27 deals totalled US$5.9 billion.
The size of this year’s deals so far is also smaller, with just one hitting the billion-dollar mark. The US$1 billion investment in Yinson Production Offshore – a unit of Malaysia’s Yinson Holding – by a consortium of investors, consisting of a wholly owned subsidiary of Abu Dhabi Investment Authority, funds managed by British Columbia Investment Management and RRJ Capital, was the biggest.
Ranking second in deal value was Blackstone’s exit from Avery Lodge, a Singapore-based worker dormitory company, through a US$556.3 million sale to Bain Capital. The next one was also a Singapore deal, where Mapletree Industrial Trust agreed to sell three properties to Brookfield Asset Management for US$418.4 million.
In contrast, in H1 2024, the biggest deal announced was the US$3.1 billion takeover of Malaysia Airports Holdings by a consortium comprising the country’s sovereign wealth fund Khazanah Nasional and BlackRock. Next was the US$1.3 billion investment in STT Telemedia Global Data Centres by investment firm KKR and Singtel.
The absence of sizeable deals in the rest of South-east Asia so far this year, stems from caution among GPs and investors, added Reed Smith’s Lim.
This “is even more pronounced for larger, more complex deals, which demand extensive due diligence and are subject to prolonged regulatory and merger clearance processes”.
All eyes on two jumbo deals
As for the outlook for the rest of this year, industry participants are cautiously optimistic.
Two keenly watched deals that have been in play since late last year would significantly boost the value of transactions for South-east Asia, if they are wrapped up in 2025.
The biggest is the sale by Singapore sovereign wealth fund GIC and KKR of their 80 per cent stake in Philippine private hospital group, Metro Pacific Health. The deal could value the target at US$3.2 billion, which would mean the sellers might pocket around US$2.6 billion.
Blackstone and TPG have reportedly emerged as the frontrunners.
The next is KKR’s sale of Singapore-based Goodpack, a provider of shipping containers and logistics services, worth US$1.8 billion when the deal was first reported in October 2024. BT understands that Miami-based I Squared Capital, Apollo Global Management and Brookfield are in the running, while the deal value has reportedly dropped to US$1.5 billion.
Apart from these two outstanding deals, Hamilton Lane’s Koh said that PE activity is likely to pick up once economic uncertainties ease and as South-east Asia “rides on the continued wave of the China + 1 trend, with supply chains increasingly expanding” in the region.
She named tech-related industries such as data centres and artificial intelligence driving up volumes, with industrial and healthcare sectors also benefiting.
Quadria Capital, an Asian healthcare-focused PE company, recently opened an office in Jakarta despite a lull in activity earlier this year.
“In spite of the perceived lulls and macro uncertainty, we are very confident of the long-term tailwinds driving growth across the healthcare sectors in Asia,” said Ewan Davis, partner and head of South-east Asia at Quadria. He added that Quadria is actively pursuing deal opportunities in countries such as Vietnam, Indonesia, Malaysia, Thailand and the Philippines.
Ashurst’s Chiam said that, overall, the outlook for the rest of the year is still positive, and expects to see interest in services, including financial services.
Lim from Reed Smith is more circumspect, as the longer transaction timelines and persistent macroeconomic uncertainties are likely to push the bulk of significant activity into 2026.
