Private equity activity in the region rises in Q3
US$1.3b raised by ride-hailing apps, Indonesia's Go-Jek and S'pore-based Grab
Private equity activity in South-east Asia roared back to life in the third quarter after a sluggish start to the year.
The 32 transactions struck in the three months to Sept 30 had a total value of US$1.91 billion ($2.8 billion) - a stark contrast to earlier in the year.
The first six months were lacklustre with only US$1.56 billion invested across 56 deals, said a report from professional services firm EY yesterday.
But the pick-up in the third quarter arose mainly from four mega-deals that accounted for over 85 per cent of transactions.
An impressive US$1.3 billion was raised by the region's two ride-hailing apps. Indonesia's Go-Jek closed a US$550 million funding round in August, while Singapore-based Grab roped in US$750 million in September.
The common theme here is Indonesia, the report said.
"While Go-Jek is entirely focused on Indonesia at present, Grab has stated that its key goal is to further penetrate the Indonesian market.
"This could see the two companies go head-to-head in a more aggressive manner going forward," the report said.
"The market in Indonesia for ride-hailing applications is estimated at US$15 billion by Grab. Further, this market looks to increase as diversification into food delivery and logistics continues."
A total of US$1.73 billion was invested across 30 deals in South-east Asia in the third quarter, while two exits - investors cashing out of their investments through acquisitions - reportedly took place.
The quarter's investment deal count was in line with the average across the last three years but slightly down on the same period in 2015, when 36 transactions were closed.
Technology was once again the most active sector with 14 deals closed in the quarter.
Over 95 per cent of the total capital raised in the third quarter was invested in two countries - Singapore, which accounted for 54 per cent of total capital raised, and Indonesia, with 42 per cent.
Although Singapore, Malaysia and Indonesia have dominated the private equity scene in South-east Asia, the trend now is for diversification, with many funds spending more time in markets such as the Philippines, Thailand and Vietnam.