While SE Asia continues to remain attractive for the private equity asset class in the post-COVID context, what has changed is the diversion of liquidity into tech deals, particularly early-stage growth investments, according to Malaysia-based Navis Capital co-founding partner Nicholas Bloy.
Speaking during a fireside chat session at DealStreetAsia’s Asia PE-VC Summit 2021, Bloy noted that the shift was also due to the difficulties in undertaking proper due diligence in brick-and-mortar businesses, as a result of pandemic restrictions.
“While demand is rising, these [tech] companies are no longer perennially loss-making businesses. So, on a risk-return blended basis, it [tech sector] looks quite attractive,” Bloy said.
Bloy also noted that the dry powder waiting to be deployed and the unrealised returns value sitting in SE Asia was a small number compared to the region’s $3-trillion economy.
Nearly 28 funds are in the market seeking an aggregate of $6.8 billion and four funds having raised $1 billion in H1 2021, according to DealStreetAsia’s Private Equity in SE Asia H1 2021 Review.
SE Asia as an investment market has become more sophisticated, Bloy added, allowing PE managers to look at different investment strategies.
“You can have more specialised funds in a way that wasn’t so obvious 10 or 20 years ago, when the deal flow was so thin, and you had to do a little bit of everything to construct a good portfolio,” Bloy said.
Having closed Navis’ eighth flagship fund at $900 million, the firm has also closed a continuation vehicle as well as launched a fund dedicated to the Cambodia-Laos-Myanmar-Vietnam region.
Edited excerpts of the fireside chat:-