Private equity deals in Asia plunged 44% in 2022. More uncertainty may be ahead

cnbc.com:

Asia-Pacific's private equity market plummeted last year — as investors' appetite for risk fell in the face of inflation and geopolitical tensions, according to Bain & Company.

The total deal value for the region plunged by 44% to $198 billion in 2022, the global management and consulting firm said in a Tuesday report. That's compared to $354 billion in 2021, the analysts said adding that nearly 70% of surveyed fund managers expect the negative trend to continue into 2024.

Lingering macroeconomic uncertainties alongside rising costs and worsening company performance that dampened investor sentiment, Bain said in its Asia Pacific Private Equity Report 2023.

«Investors, sensing a new era of slower growth, mounting inflation, and greater uncertainty, took time out to recalibrate their strategies, recognizing that what worked well in the past may not be the right approach for 2023 and beyond,» a group of authors from Bain's Private Equity practice including Kiki Yang said in the report.

«If the conditions—macroeconomic uncertainty, poor company performance, and a decline in deal activity—that prevailed in 2022 persist, valuations may continue to contract as fund managers adopt a wait-and-see attitude,» Bain wrote.

Deal value in Greater China fell by 53% as investors grappled with the nation's zero-Covid policy, it said, leading declines in the wider region. China and India accounted for a drop of $35 billion in total deal value for large growth deals for the year, Bain said.

While internet and technology remained as Asia-Pacific's largest investment sector, it also saw a decline from the previous year, which marked the lowest level seen since 2017, the firm said.

«For more than a decade, the Internet and tech sector has