Statistics from GlobalData and Ansarada both point to slowed deal activity within the region, but emerging technologies such as artificial intelligence (AI) may present opportunities.
Increasing interest rates and cost of leverage amid monetary tightening top challenges facing private equity- but dealmakers continue to find creative solutions for growth Global PE deal
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Dechert/Mergermarket explains in the recently published Global Private Equity Outlook 2021 report.that Asia Pacific currently represents just 25% of the global PE industry. This, it says, leaves headroom and runway for significant growth for the next decade at least.
THE ongoing impact of the Covid-19 crisis and geopolitical tensions are seen as the key risks for deal-making in Asia Pacific.
But private equity (PE) investors still regard the region as an attractive market, offering a huge opportunity for the PE industry, according to a survey by financial data provider Mergermarket on behalf of Dechert LLP.
“Not only does Asia Pacific have an unmatched economic profile – both in size and growth – it is significantly under-penetrated by PE, ” Dechert/Mergermarket explains in the recently published Global Private Equity Outlook 2021 report.
Outlook 2021: Multiple concerns ahead for PE investing
With both the volume and value of private equity deals in 2020 having dropped, many investors believe Covid-19 will affect the industry more severely than the 2008 financial crisis.
Private equity investors believe mounting geopolitical tensions and the ongoing fallout from the Covid-19 pandemic 2021 could cause private equity deal losses and more distressed transactions. But they anticipate Asia Pacific economies and investment opportunities rebounding faster than other parts of the world, with China and India looking like particularly appealing investment opportunities.
Source: Dechert
According to a December 2 report by US-headquartered law firm Dechert, the total number (2,260) and volume ($382.7 billion) of global buyout deals for the first three quarters of this year dropped 21% and 12% year on year, respectively.