Study: Indonesia top global PE market

Most GPs believe Indonesia will present the best growth opportunities for private equity firms, while interest in China and India fades.

Private equity firms cite Indonesia as the most attractive market for future investments than any other high growth market worldwide, according to a new report by Grant Thornton surveying 143 private equity executives worldwide. Myanmar and Malaysia were also in the top ten. 

Interest in Southeast Asian economies comes from respondents globally, especially GPs in Southeast Asia, China and India. 

“Southeast Asia generally is attractive – Indonesia, Malaysia, etc. These countries have stable economic growth, but it’s probably mostly because competition in Greater China is so much keener than it was,” one Hong Kong-based respondent said. 

In contrast, GPs are significantly downcast about the investment opportunities coming from China and India, according to the survey. It showed that 56 percent expect deal activity in China to decrease, with 45 percent expecting the same from India. Only 33 percent of GP respondents said for each county deal activity would increase, with the balance expecting it to stay the same.

This shows a dramatic turnaround in sentiment. In 2011, 78 percent of respondents expected investment activity in India to increase, with the remaining 22 percent expecting it to remain steady.

Grant Thornton findings also showed that Asian trade buyers are expected to be the most active foreign acquirers going forward. Corporate strategics in China, Japan and Korea in particular will provide exit routes for private equity firms globally, according to 31 percent of respondents.

“Of particular interest is the expected significance of Japan, reflecting the fact that the strong Yen coupled with sluggish domestic demand is encouraging international expansion. Private equity [firms] globally expect to see Japanese buyers, and this is particularly the case in Europe, India and Asia Pacific,” the report explained.