Bain Report Asia Pacific Private Equity-Report-2023

Asia-Pacific Private Equity Report 2023
After a turbulent year, investors brace for more uncertainty.

Authors and acknowledgments
This report was prepared by:
Kiki Yang, a Bain & Company partner based in Hong Kong and coleader of the firm’s Asia-Pacific
Private Equity practice;
Thomas Kidd, a partner based in Singapore and a member of Bain’s Southeast Asia Private Equity
practice; and
Elsa Sit, practice vice president with Bain’s Private Equity practice.
The authors wish to thank Karren Harris, Nancy Zheng, Allison Gao, Usman Akhtar, Hao Zhou, Wonpyo
Choi, Sungwon Yoon, Sriwatsan Krishnan, James Viles, Lachlan McMurdo, Sebastien Lamy, Ben Balzer,
Alex Boulton, Vikram Kapur, Kelly Pu, Andrea Campagnoli, Jisoo Ahn, and Lars Verheyen for their
perspectives on macroeconomic implications; Hugh MacArthur, Rebecca Burack, Charles Lambert,
Marco D’Avino, Sushil Pasricha, and Hiroaki Adachi for their perspectives on performance improvement;
Winnie Xie and Owain Palmer for their contributions; Usman Akhtar, Hao Zhou, Wonpyo Choi, Sungwon
Yoon, Sriwatsan Krishnan, A Prabhav Kashyap, Sai Deo, James Viles, and Jim Verbeeten for their input
on regional dynamics; Echo Han, Dhawal Pandey, Sanyam Sharma, and the team from the Bain
Capability Network (Ira Kaur, Vikas Sharma, Gagandeep Singh, Deep Zabakh, Ananya Malhotra, and
Ritvik Vasudeva) for their analytic support and research assistance; and Gail Edmondson for her
editorial support.
We are grateful to Preqin and Asia Venture Capital Journal (AVCJ) for the valuable data they provided
and for their responsiveness.
This work is based on secondary market research, analysis of financial information available or provided to Bain & Company and a range of
interviews with industry participants. Bain & Company has not independently verified any such information provided or available to Bain
and makes no representation or warranty, express or implied, that such information is accurate or complete. Projected market and financial
information, analyses and conclusions contained herein are based on the information described above and on Bain & Company’s judgment
and should not be construed as definitive forecasts or guarantees of future performance or results. The information and analysis herein do not
constitute advice of any kind, are not intended to be used for investment purposes, and neither Bain & Company nor any of its subsidiaries
or their respective officers, directors, shareholders, employees, or agents accept any responsibility or liability with respect to the use of
or reliance on any information or analysis contained in this document. This work is copyright Bain & Company and may not be published,
transmitted, broadcast, copied, reproduced or reprinted in whole or in part without the explicit written permission of Bain & Company.
Copyright © 2023 Bain & Company, Inc. All rights reserved.

Contents
Economic turmoil, global tensions, and a new era of

slower growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
What happened in 2022? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Deals: a dramatic fall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Sector view: Internet and tech out in front . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Competition eases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Multiples slide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Exits plummet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Fund-raising plunges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Returns still rising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Riding out the storm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Smart investing in a downturn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Pre-deal strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Spot the winners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Scenario planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Post-deal strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Portfolio companies: fit for the storm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Supply chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Corporate support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
1
Economic turmoil, global tensions, and a new era of

slower growth
Asia-Pacific private equity funds turned cautious in 2022, ending two years of record dealmaking.
By midyear, an economic slowdown collided with mounting global and regional uncertainties to produce a
perfect storm for investors. As companies struggled, general partners (GPs) retrenched and Asia-Pacific deal
value plummeted 44% to $198 billion (see Figure 1). Exits and fund-raising also fell sharply below 2021 levels.
In golden hindsight, investor exuberance and a superabundance of global capital helped propel
Asia-Pacific deal value to an extraordinary high in 2021. That set the stage in 2022 for an equally
sharp decline as economic forces battered the market, pushing deal value to the level of 2020.
Many conditions contributed to investor gloom, including slower economic growth, declining consumer
confidence, falling manufacturing output, high inflation, and heightened geopolitical tensions. Even the
relaxation of Covid restrictions across the region failed to reverse the trend. Macroeconomic weakness
is now the No. 1 concern keeping the region’s investors awake at night, according to Bain’s 2023 Asia-Pacific
Private Equity survey.
Greater China, the region’s private equity powerhouse, suffered the biggest contraction in deal activity.
Covid lockdowns, declining growth, and Sino-US tensions contributed to a 53% drop in Greater China
Figure 1: Asia-Pacific deal value, exit value, and fund-raising all plunged in 2022
Asia-Pacific private equity Asia-Pacific private equity Asia-Pacific-focused closed

investments ($B) exits ($B) funds, by close year ($B)
Deal count Exit count
3,000 199 $352B 347

1,000
354
130
158 283
$109B
201 249
2,000 132
163 91
190 198 179 184
177 92 500
$147B
1,000 105
0 0
2016 17 18 19 20 21 22 2016 17 18 19 20 21 22 2016 17 18 19 20 21 22
Note: Excludes real estate

Sources: AVCJ; Preqin
2
deal value from a year earlier. That fall depressed Greater China’s share of Asia-Pacific deal value to
a nine-year low of 31%.
Internet and technology, still the region’s largest investment sector, made up only 33% of Asia-Pacific
deal value in 2022, the lowest level since 2017. Inflation, which erodes topline growth and profitability,
contributed to the decline in the sector’s share of deal value. Investors turned instead to defensive
sectors that offer steady cash flow and lower risk, including advanced manufacturing and energy
and natural resources. Investments in critical infrastructure across the region also contributed to
the growing number of deals in these sectors.
An uncertain business outlook and lower ratings for public companies helped push deal multiples
down to 12 times from 13.1 times (median enterprise value to EBITDA) a year earlier. The slowdown
in dealmaking and fewer top-priced Internet and tech deals also depressed valuations. However, GPs
still don’t view current valuations as attractive, given ongoing market uncertainty. High entry multiples
remain a top concern, according to our 2023 survey.
Turbulent market conditions and uncertainty pushed less-competitive investors to the sidelines in 2022.
The number of active investors dipped 2%, the first decline since 2015. The top 20 investors accounted
for 32% of deal value, up slightly. Fund-raising also suffered. The total capital raised by Asia-Pacific-
focused funds fell 43% to $105 billion, and on average, GPs needed more time to close new funds.
However, global and regional flagship funds that have strong track records and local operations were
less affected.
The macroeconomic landscape remains unstable, and higher

inflation and weaker growth are likely to have a strong impact on
investment choices and portfolio performance in the coming year.
Despite a stormy and unpredictable investment climate, Asia-Pacific dry powder—the level of unspent
private equity capital—rose to a record $676 billion. Returns of Asia-Pacific-focused funds remained
strong, and private equity continued to outperform public markets.
The macroeconomic landscape remains unstable, and higher inflation and weaker growth are likely to
have a strong impact on investment choices and portfolio performance in the coming year. The best firms
are adapting their strategies and employing scenario planning to identify winners in the right sectors. GPs
are also taking a more active role in portfolio management. Nearly one in four GPs say cost improvement
is the most important contributor to strong returns, up from only 5% five years ago, and is now second
only to topline growth.
3
What happened in 2022?
After a decade of strong growth and surprising resilience through the first two years of the Covid-19
pandemic, Asia-Pacific’s private equity market took a nosedive in 2022. Amid growing macroeconomic
gloom, consumer confidence deteriorated and manufacturing slumped. At the same time, governments
tightened credit and public debt rose as currencies depreciated, undermining financial stability.
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 (see Figure 2).
A couple of developments highlight the sobering economic shift for private equity investors. China’s
GDP growth dropped to 3% in 2022, down sharply from an annual rate of about 7% during the last
Figure 2: Asia-Pacific economies face growth and stability challenges
Slowing growth Higher inflation Weakening

domestic currencies
Real GDP growth PMI Consumer prices Producer prices Value vs. US$
Basis-point change Percentage change YoY monthly percentage YoY monthly percentage Percentage change
change change
300bps 2% Southeast Asia 8% 15% 10%

Australia
Southeast India
Asia India
Australia 12 India China
0 6 0
0
Australia South Korea Japan Southeast Asia
Japan 9
Southeast Asia South Korea India
South Korea –2 4 Southeast Asia –10
Japan
India China 6 South Korea
–300 Australia
Japan
–4 2 China China –20 Japan
3
Australia
China South Korea
–600 –6 0 0 –30
Worse Better
Notes: Southeast Asia reflects data from Malaysia, the Philippines, Thailand, Vietnam, Indonesia, and Singapore; all measurements are 2022 averages
vs. 2021 averages
Sources: Departments of statistics in respective countries; IHS Markit; Bloomberg; Refinitiv; Wind
4
decade, and the largest GDP slowdown in the region. Covid lockdowns contributed to sluggish domestic
consumption; China’s Consumer Confidence Index dropped by 28% on average from April to November
2022, compared with the year-earlier average. Both India and Southeast Asia reported robust economic
growth, but high inflation. Australia’s Consumer Price Index rose by a record 7.8% in the fourth quarter
of 2022. Japan and South Korea struggled with sharp currency depreciation in 2022—20% and 13%,
respectively—against the US dollar over the previous year.
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.
Let’s review for a minute some of the macroeconomic and political factors that contributed most to
market turbulence in 2022 and will affect the region’s growth prospects in the coming year.
• Ukraine crisis. Sanctions on Russian exports disrupted the global supply chain, especially in energy.
Spiking commodity prices triggered global inflation.
• Tightening credit. The US Federal Reserve Bank increased its benchmark interest rates sharply
in the second half of 2022 to battle inflation. Tighter liquidity prompted a global capital outflow to
the US, which led to currency depreciation and financial market instability in Asia-Pacific countries.
India’s consumer and producer prices in 2022 rose sharply over the previous-year average, and
manufacturers passed higher prices to consumers. The central banks of India and South Korea
accelerated interest rate increases to address inflation. In Australia, rising interest rates depressed
the housing market. Sales of established homes and attached dwellings fell by 18% on average in
the first nine months of 2022, compared with the same year-earlier period. Japan’s high debt
ratio, combined with a significantly depreciated yen, could trigger financial instability.
• Sino-US decoupling. Worsening geopolitical tensions between China and the US led the US to
impose additional trade restrictions on selected sectors, curbing China’s growth and further
depressing the sales of companies relying on exports to the US and other Western markets.
• Loosening of Covid-19 restrictions. Lockdowns and other curbs to limit the spread of disease
severely interrupted China’s economy and disrupted supply chains and other economic activities
throughout the region. Chinese fund managers’ top concerns for the coming year are the short- and
long-term impact of Covid policy, Sino-US decoupling, and the effect of those two factors on
manufacturing activities and domestic consumption.
5
• Labor shortage. A record level of job vacancies throughout the Asia-Pacific region curbed economic
growth. Covid-19 and the structural shortage of skilled workers exacerbated the deficit. Australia
was among the worst hit, with job vacancies on average 122% higher in 2022 than in 2020.
Deals: a dramatic fall
After two years of growth, Asia-Pacific deal value plunged in 2022 to $198 billion, down 44% from a
year earlier and 9% below the previous five-year average (see Figure 3). Deals were fewer in number
and smaller in size. Depreciating currencies also diminished the average deal size in US dollars.
The smaller average size of deals reduced deal value in Australia–New Zealand (–48%), Japan (–28%),
Southeast Asia (–52%), and India (–25%). By contrast, a sharp drop in deal volume depressed deal
value year-on-year in Greater China (–53%) and South Korea (–39%). In Japan and Korea, exchange-
rate fluctuations were responsible for 50% of the reduction in average deal size.
During the first half of the year, deal activity was roughly on par with 2021, but as market uncertainties
multiplied, deal value in the second half plunged 66% from the year-earlier period. A deteriorating
macroeconomic outlook, higher financing costs, and worsening company performance all reduced
GPs’ appetite for risk.
Nearly one-third of the respondents to our 2023 survey said macroeconomic conditions significantly
or severely reduced deal activity. In China, that figure rose to 66% of GPs. Looking ahead, the pressure
Figure 3: Asia-Pacific deal value fell by 44%; the number and average size of deals both declined
Factors affecting the change in total deal value, 2022 vs. 2021 ($B)
$354B
–44%
–75
–88
22 198
–14
–103
Exchange-rate impact
2021 deal value Deal volume impact Average deal size impact Other factors 2022 deal value
Notes: Excludes real estate deals; deal value includes deals with a transaction value greater than or equal to $10 million; deal volume reflects all deals
(including those without a transaction value)
Source: AVCJ
6
on dealmaking isn’t likely to dissipate soon. More than 50% of fund managers expect the negative
trend to continue into 2024.
Deal value fell sharply in every Asia-Pacific market in 2022, with the declines ranging from 25% to 53%
(see Figures 4 and 5). Greater China’s share of the region’s total deal value plummeted to 31%, a nine-
year low, while India increased its share to 23%. Greater China’s deal value shrank 53%—more than
any other Asia-Pacific market—as investors grappled with uncertainties related to the government’s
zero-Covid policy, political tensions, and tech regulatory crackdowns. The average deal size in Australia–
New Zealand fell 57%.
Growth deals continued to outpace buyouts in 2022, producing 54% of deal value, up from 50% in
2021 (see Figure 6). However, the total value of large growth deals of $200 million or more fell 45% in
2022, compared with the previous year. Deal value for this category of big-ticket transactions had
risen nearly every year since 2014.
Investors’ shrinking appetite for risk sharply reduced the number of large growth deals in Greater
China and India. Together, Greater China and India accounted for a $35 billion decline in total deal
value for big-ticket growth deals in 2022.
Another factor that depressed growth deals was the dramatic drop in the value of technology companies
on public stock markets, which affected private markets, creating valuation mismatches and
complicating or hindering the completion of mid- to late-stage tech deals.
Figure 4: Deal value in Greater China and Southeast Asia plummeted more than 50% in 2022
Asia-Pacific private equity investment value, by market ($B)
‒38%
$150B ‒53%
100 +29%
+23% ‒48%
‒25%
+36% +1%
‒21%
50 ‒39%
‒28% ‒52%
0
Greater China India Australia–New Zealand Japan South Korea Southeast Asia
2017‒21 average 2021 2022

Source: AVCJ
7
Figure 5: Greater China’s share of deal value fell sharply; India’s share grew to 23%
Share of Asia-Pacific private equity deal value
$106B 217 198

100%
Southeast Asia
Japan
80 South Korea
Australia–New Zealand
60
India
40
20 Greater China
0
2012–16 2017–21 2022
Average
deal size $109M 133 100
($M)
Notes: Average deal size is based on a simple average; excludes real estate
Source: AVCJ
Figure 6: Growth deals dominated the market again, representing more than 50% of deal value
Share of Asia-Pacific investment value, by deal type
2021–22
change
100% $177B 190 163 201 354 198
Other –75%
80 Turnaround/restructuring –99%
PIPE –51%
60 Start-up/early stage 3%
40 Growth deals $50M or less –24%
20 Growth deals $50M–$200M –36%
Growth deals $200M or more –45%
0
Buy-out –51%
2017 18 19 20 21 22
Growth deals’ 39% 59% 56% 56% 50% 54%

share of total value
Average growth $112M 138 101 96 104 88
deal size ($M)
Average buyout $527M 302 309 318 792 486
deal size ($M)
Notes: Excludes real estate; PIPE is private investment in public equity; start-up/early stage investments use financing for product development and initial
marketing, the company may be in the process of being organized or may have been in business for a short time, but hasn’t sold its product commercially; growth
includes expansion, growth, mezzanine, and pre-IPO capital deals; series are sorted with biggest on bottom based on 2022 shares
Source: AVCJ
8
By contrast, start-up and early-stage deal value grew 3% year-on-year.
The average size of buyouts and growth deals declined year-on-year to $486 million and $88 million,
respectively (down 39% and 15%). The average size of growth deals dropped to the lowest level since 2015.
In Asia-Pacific countries where growth deals dominate the market, Greater China’s share of growth
deals rose to 74% of total China deal value, up from 67% a year earlier, while India’s share decreased
to 67% of total India deal value, from 70% in 2021 (see Figure 7). South Korea’s share of growth deals
fell to 46% from 53%, and Southeast Asia’s fell to 63% from 68%.
In those countries where buyouts dominate the market, Australia–New Zealand’s share of buyouts
fell to 70% of deal value from 90%, as the number of megadeals declined, deal count dropped, and
investors sought smaller buyouts. No 2022 deal in Australia–New Zealand was larger than $10 billion,
and the average buyout size fell to about $600 million. By contrast, a year earlier, the two countries
produced two large deals over $10 billion (Sydney Airport Holdings $22 billion; AusNet Services
$13 billion), and the average buyout deal size was $1.9 billion.
Japan’s share of buyouts fell year-on-year to 76% from 85%. The country generated 21 buyouts in 2022,
and the average deal size fell to $750 million. By contrast, Japan generated 28 buyouts in 2021, with
an average deal size of nearly $900 million. In all markets where buyouts dominate, the rising cost
of deal financing was a key factor depressing the number of buyouts, as central banks tightened credit,
interest rates rose, and liquidity shrank.
Figure 7: While growth deals led in deal value, buyouts remained more popular in Australia–New
Zealand and Japan
Share of Asia-Pacific investment value, by deal type, 2022
$62B 45 38 21 20 13 Turnaround and

100% restructuring
PIPE
80 Start-up/early stage
Buyout
60
40
Growth
20
0
Greater China India Australia– Japan South South-
New Zealand Korea east
Asia
Share of buyout 9% 21% 70% 76% 34% 21%

deal value
Share of growth 74% 67% 24% 20% 46% 63%
deal value
Notes: Excludes real estate; growth includes expansion, growth, mezzanine and pre-IPO capital; PIPE is private investment in public equity
Source: AVCJ
9
Carve-outs were again an important buyout theme in 2022, especially in Japan and South Korea,
where a challenging economic environment prompted conglomerates to focus on their core businesses
and sell noncore operations. Some of the largest carve-out deals in 2022 include the sale of Hitachi
Transport System to KKR ($6.1 billion), Olympus Corp.’s sale of Evident Corp. to Bain Capital ($3.1 billion),
and SK Group’s sale of SKC Plastics to Hahn & Co. ($1.3 billion).
Sector view: Internet and tech out in front
For more than a decade, the Internet and tech sector has attracted the largest share of private equity
capital in the Asia-Pacific region. However, its share of deal value dipped in 2022 to 33% from 41%
the previous year (see Figure 8). That decline was due primarily to fewer and smaller deals in China
and India. Internet and tech deal value for the two large tech-focused markets fell $65 billion,
compared with 2021.
Within the Internet and tech sector, cloud services remained the largest subsector in deal value, but
its share decreased to 41%, down from 55% a year earlier. Among cloud services, consumer tech
businesses such as e-commerce and online services took the hardest hit, with deal value dropping by
68% and 76%, respectively, from the previous year.
The traditional strongholds for Internet and tech deals—Greater China, India, and Southeast Asia—
all experienced sharp declines. Greater China’s Internet and tech deal value fell 62% year-on-year,
Figure 8: The share of technology and cloud service deals fell to 33%; the share of advanced
manufacturing and healthcare deals grew
Percentage of Asia-Pacific deal value, by sector
100% Other industries

Government/public sector
Services
80 Higher education and training
Consumer products
Financial services
60
Communications and media
Retail
40 Energy and natural resources

Healthcare
Advanced manufacturing
20 and services
Technology and cloud services
0
2013 14 15 16 17 18 19 20 21 22
Notes: Other deals (includes those tagged as private equity, conglomerate, other industry, and no industry) aren’t labeled; excludes real estate
Source: AVCJ
10
led by the cloud services (down 88%) and software (59%) subsectors. India’s and Southeast Asia’s
dropped by 52% and 49%, respectively.
Advanced manufacturing and energy and resources were the only sectors that had more deals in 2022.
That shift reflected investors’ preference for companies with a low-risk profile that generate steady cash
flow. At the same time, government demand for private capital investment to develop and upgrade
critical infrastructure including utilities, telecommunications, and transportation remains strong,
especially in Southeast Asia and India.
For more than a decade, the Internet and tech sector has attracted
the largest share of private equity capital in the Asia-Pacific region.
However, its share of deal value dipped in 2022 to 33% from 41%
the previous year.
Advanced manufacturing’s largest subsector, logistics and transport, represented 32% of deal value, down
from 60% a year earlier. The sale of Hitachi Transport System for $6.1 billion was the largest deal. Several
megadeals lifted the second-largest subsector, automotive and mobility, to 28% of deal value, more than
doubling its relative share. They included the sale of GAC Aion ($2.5 billion) and Sunwoda Electric Vehicle
Battery ($1.2 billion).
In the energy and natural resources sector, investments in utilities and renewables made up 60% of
deal value, reflecting the rise of environmental, social, and corporate governance (ESG) considerations
as an investment priority. The number of utilities and renewables deals rose 47% year-on-year, with
an investment in Macquarie Group’s offshore wind unit exceeding $1 billion.
The growing embrace of ESG considerations has boosted interest in renewable energy companies in
particular. Half of the GPs we surveyed plan to significantly increase their effort and focus on ESG in
the next three to five years, up from 30% three year ago.
Competition eases
Tough market conditions pushed some investors to the sidelines in 2022. The number of active investors
in the Asia-Pacific region fell 2% year-on-year, the first drop since 2015 (see Figure 9). The largest decline
was in the number of institutional investors, which fell 15%.
Deal value remained relatively concentrated among top funds. The share of deal value contributed by
the region’s top 20 funds increased slightly to 32%. Aided by the merger of two large funds, Baring
11
Figure 9: The number of active investors declined 2%; the top 20 funds produced nearly one-third
of deal value
Number of active firms investing in the Asia-Pacific PE market
CAGR Change
2016–21 2021–22
3,360 3,279
2,358
1,955
1,827
1,447 1,548 18% –2%
1,176
2015 16 17 18 19 20 21 22
Top 20
funds’ 30% 38% 37% 33% 35% 31% 29% 32%
share
Source: AVCJ
Private Equity Asia and EQT, global GPs continue to expand their presence in the region, and big funds
often have an edge identifying deals and raising capital.
Global GPs and domestic GPs continue to be the largest investor groups, based on deal value. The share
of corporate investors rose slightly in 2022 (see Figure 10).
Multiples slide
Deal multiples—the ratio of enterprise value to EBIDTA—declined to 12 from 13.1 a year earlier
(see Figure 11). Several factors contributed to the reversal, the first since 2019, when multiples fell to
10. The rerating of companies listed on public markets typically has a knock-on effect, diminishing
the multiples of portfolio companies. A second factor is deteriorating company performance in a
tougher economic landscape. The multiples of growth companies also may decline as investors in
an uncertain market seek more defensive investments, such as companies with strong cash flow and
dependable profits. Finally, the Internet and tech sector, which typically contributes to high valuations,
shrank in 2022 as a share of overall deal value.
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. Sixty-nine percent of the fund managers we surveyed expect valuations to
continue declining through 2024.
12
Figure 10: The most active Asia-Pacific investors were global and domestic GPs
Percentage of Asia-Pacific deals involving specific investor groups, weighted by value
75%
50
25
0
Global GPs Regional GPs Domestic GPs Government Institutional Corporate
affiliates investors investors
2017 2018 2019 2020 2021 2022
Note: The sum of percentages for each year is greater than 100% because many deals have more than one investor group
Source: AVCJ
Figure 11: Asia-Pacific deal multiples declined in 2022
Median EV/EBITDA multiple on Asia-Pacific private equity-backed M&A transactions
14.5
13.7
13.1
11.8 12.0
11.6
11.3
9.7 10.0
9.4
8.8 8.6
8.4x
2010 11 12 13 14 15 16 17 18 19 20 21 22
Notes: EV is enterprise value; equity contribution includes contributed equity and rollover equity; based on pro forma trailing EBITDA; excludes multiples less
than 1 or greater than 100
Source: S&P Capital IQ
13
Exits plummet
Following a record year for Asia-Pacific exits in 2021, exit value plunged back to earth, falling 33%
year-on-year to $132 billion, 1% below the previous five-year average (see Figure 12). Three key factors
deterred GPs from selling: a significant rerating of public market valuations, fewer avenues for exits
given the decline in IPOs, and deteriorating portfolio performance.
The average exit value declined 14% to $256 million in 2022, down 8% from the previous five-year
average. Nearly 50% of the GPs we surveyed said the 2022 Asia-Pacific exit environment was “far
more challenging,” while 82% applied that label to Greater China’s exit market. The top three reasons
GPs cited for suboptimal exit opportunities were IPO market underperformance (73%), macroeconomic
softness (60%), and multiple compression (50%).
Initial public offerings (IPOs) remained the primary channel of exit, accounting for 45% of the exit
market, down slightly from the previous year. Trade sales represented 33%, unchanged from 2021.
And secondary deals grew to 22% of the market, up from 19% a year earlier.
Exit value declined sharply in most Asia-Pacific markets, except for Australia–New Zealand
(see Figure 13.) Buoyed by nine blockbuster exits worth more than $1 billion, exit value in these
two countries rose 43%. Those blockbuster exits included six secondary deals and three
trade deals.
Figure 12: Asia-Pacific exit value in 2022 dropped by one-third
Asia-Pacific private equity exit value ($B)
Asia-Pacific
PE exit count
199
158 800
137 132
105 130
109
600
$90B 91
83 92
400
60
200
0
2011 12 13 14 15 16 17 18 19 20 21 22
IPO Trade Secondary Exit count

Source: AVCJ
14
Figure 13: Exit value in 2022 declined in all the regions except Australia–New Zealand
Asia-Pacific private equity exit value, by market ($B)
‒13%
‒35%
$75B
+188% +12%
50
+43% ‒32% ‒47%
‒50%
‒66% ‒39%
‒73%
25 ‒46%
0
Greater China Australia–New Zealand India South Korea Southeast Asia Japan
2017‒21 average 2021 2022

Source: AVCJ
Renewable energy-related sales accounted for 60% of deal value for transactions over $1 billion in
Australia and New Zealand. The Ukraine crisis and growing commitment to ESG fueled strong
investor interest in renewable energy companies in 2022.
South Korea and Japan recorded the largest declines in exit value. Currency depreciation undercut
companies’ performance and diminished GPs’ interest in exits. A sluggish stock market added to the
exit gloom. Korea’s KOSPI fell almost 20% in 2022. In Greater China, exit value slumped to the lowest
level in three years. Exit value decreased 32% in India from 2021.
Greater China’s share of exit value dropped to 44%, compared with a previous five-year average of
50%. India’s share remained consistent at 18%. South Korea, Southeast Asia, and Japan all lost share
in 2022, while Australia–New Zealand increased its share to 24% (see Figure 14).
Public stock market listings remained the top channel for exit. But a gloomy and uncertain economy
overshadowed IPOs. The exit value for IPOs decreased by 38% year-on-year. China accounted for 89%
of the region’s IPO exit value, the largest share since 2012. India ranked No. 2, with a share of only 6%.
The US eased restrictions imposed in 2021 on Chinese IPOs on US exchanges, paving the way for 18
Chinese companies to list in the US in 2022. However, the viability of listing Chinese companies on
US exchanges remains uncertain and vulnerable to geopolitical tensions.
15
Figure 14: China still dominates Asia-Pacific exit value; Australia–New Zealand outpaced India to
rank No. 2
Share of Asia-Pacific private equity exit value, by region
$99B 134 132

100%
Japan
80 Southeast Asia
South Korea
India
60
Australia–New Zealand
40
20 Greater China
0
2012–16 2017–21 2022
Average
exit size $184M 238 256
($M)

Source: AVCJ
The Internet and tech sector is the largest in terms of Asia-Pacific IPO exit value and has held that
position since 2017. In 2022, it accounted for 42% share, down from 48% year-on-year. Healthcare
and advanced manufacturing were No. 2 and No. 3 in IPO exit value, with 19% and 18%, respectively,
both up from 15% a year earlier.
Fund-raising plunges
After a sharp rise in 2021, global fund-raising activity declined 8% in 2022 (see Figure 15). The share
of Asia-Pacific-focused funds fell to 10% in 2022 from 16% a year earlier.
By comparison, Asia-Pacific fund-raising slumped even more dramatically. Asia-Pacific-focused-funds

raised $105 billion in 2022, down 43% year-on-year and 70% below their 2016 peak (see Figure 16).
Four out of five GPs said 2022 fund-raising was “very challenging” or “somewhat more challenging”
than in 2021, according to our survey. More than three-quarters said fund-raising in China was “very
challenging,” and 56% characterized Southeast Asia’s environment the same way.
Funds of all sizes and levels of experience needed more time to close funds in 2022 (see Figure 17).
The increase in average time on the road for Asia-Pacific-focused funds, especially smaller and first-time
funds, underscored limited partners’ (LPs) preference for funds with an established track record. Funds
that had the least difficulty closing were those with differentiated strategies and realistic expectations.
16
Figure 15: Global fund-raising fell 8% in 2022; the share of Asia-Pacific-focused funds fell to 10%
Global private equity closed funds, by final size and year of final close ($B)
(–8%)
1,167
1,062 1,055 1,069
981 1,014
$951B
Rest of the world
Asia-Pacific-focused
2016 17 18 19 20 21 22
Share of
Asia-Pacific- 37% 35% 28% 23% 17% 16% 10%
focused funds

Source: Preqin
Figure 16: Asia-Pacific fund-raising contracted sharply in 2022, especially for funds focused on
Greater China
Asia-Pacific-focused private equity capital raised, by final year of close ($B)
$352B 347
283
249 (‒43%)
179 184
105
2016 17 18 19 20 21 22
Greater China (renminbi-denominated) Greater China (other currency)

Pan-Asia-Pacific India Other country-specific

Source: Preqin
17
Figure 17: GPs needed more time to close funds in 2022, especially first-time funds
Time to close (months)
Large, 2022 16
experienced
funds 2019‒21 average 13
Smaller, 2022 19
experienced
funds 2019‒21 average 13
2022 30
First-time
funds
2019‒21 average 19
Notes: Excludes real estate; large, experienced funds exclude first-time funds and include funds with more than $1 billion in assets
Source: Preqin
Three key factors contributed to a challenging fund-raising environment. The first was a dismal
economic outlook that includes rising inflation and a strong US dollar, which reduced LPs’ appetite
for risk. GPs we surveyed said the most challenging aspect of fund-raising was LPs’ decision to reduce
their relative allocations for the Asia-Pacific region.
A second factor was the reduced distribution of capital back to LPs, resulting from fewer exits and
depressed IPO markets throughout the region. Third, many LPs have allocation restrictions or caps
on the share of funds allocated to private equity. With public markets down significantly, private
equity holdings account for a higher percentage of LP portfolios, limiting their ability to allocate
new funds to private equity.
Fund-raising declined in most Asia-Pacific markets in 2022, with the sharpest drop affecting funds
focused on Greater China. Bucking that trend, Australia–New Zealand recorded an 80% increase in
private equity capital raised.
Greater China’s share of total Asia-Pacific funds raised shrunk to 24%, a 15-year low. The share of private
equity raised by Australia–New Zealand, Japan, and India rose to 7%, 6%, and 5%, respectively. The
increase in share for these three countries reflects greater LP capital allocation to alternative markets
following the flight of foreign capital from China.
By contrast, private equity raised by pan-Asia-Pacific funds increased 44% year-on-year. The share
of pan-Asia-Pacific funds rose to 52%, a 22-year high. Instead of betting on specific country funds,
18
LPs chose to reduce risk by betting on the region. Bain Capital Special Situations Asia II fund raised
$2.1 billion, and KKR’s Asia Credit Opportunities Fund raised $1.1 billion.
In a key shift, Greater China-focused funds raised only $25 billion, a 77% decline from the previous
year. That contraction pushed Greater China’s share of Asia-Pacific-focused funds to 24%, down
from 58% a year earlier. One reason was foreign LPs’ sharply diminished interest in China given the
country’s uncertain economic outlook and US-China geopolitical tensions (see Figure 18).
Regulations limiting foreign investment also curbed investor interest in Greater China-focused
funds. The latest version of China’s Foreign Investment Negative List went into effect on January 1,
2022. Although the list was shorter than a previous draft, it still strictly regulates more than
30 products or subsectors (including critical infrastructure, airports, telecommunications, and
rare earth mining).
The number of Asia-Pacific-focused funds closed in 2022 fell to 352, down 59% from the previous year.
But the average size of closed funds increased 40% year-on-year (see Figure 19). And a greater
percentage of funds managed to raise more than their target. The final size of new funds raised
exceeded the target size by an average 21%, up from 2% in 2021.
Funds grew larger, in part because of the increase in midsize ($500 million to $1 billion) and large
funds ($1 billion to $3 billion) closed in 2022. This trend underscores LPs’ flight-to-quality as they
double down on funds with established track records in a competitive fund-raising environment.
Figure 18: Capital raised by Greater China-focused funds in 2022 decreased 77%
Greater China-focused private equity capital raised, by final year of close ($B)
$290B
208
178
‒77%
113 107
25
2017 18 19 20 21 22
First half Second half
Notes: Amounts shown are for funds focused only on Greater China; excludes real estate
Source: Preqin
19
Figure 19: Significantly fewer funds closed in 2022, but the average size grew, and GPs exceeded
their targets
Number of Asia-Pacific-focused Average fund size of closed Final size vs. target size for
funds closed Asia-Pacific-focused funds ($M) closed Asia-Pacific-focused funds
297
1,604 21%
212
201
1,241
$176M 175
1,022
864 2%
‒6% ‒6%
352
‒11%
2018 19 20 21 22 2018 19 20 21 22 2018 19 20 21 22
Notes: Funds closed include those focused only on Asia-Pacific; excludes real estate
Source: Preqin
The share of midsize funds of total funds raised increased to 19% in 2022 from 16% a year earlier, while
the share of large funds rose to 29% from 20%.
Two Asia-Pacific megafunds ($5 billion or larger) closed in 2022: Baring Private Equity Asia Fund VIII
($11.2 billion) and Blackstone Capital Partners Asia II ($11 billion, including a $4.6 billion contribution
from Blackstone’s global funds). Blackstone closed its Asia II fund in 15 months, quicker than the
average 16 months needed for large, experienced funds (over $1 billion), which underscored LPs’
preference for established funds with a solid performance track record.
Dry powder, or total unspent private equity capital, rose to a new high of $676 billion, a 20% increase
over the previous year (see Figure 20).
The buildup of dry powder was most pronounced in two types of funds. The share of unspent private
equity capital in venture funds and fund of funds increased to 30% and 31% of Asia-Pacific dry powder,
respectively, in 2022 from 26% and 27% a year earlier. Fund of funds dry powder has grown at the
fastest pace since 2015.
Dry powder at buyout funds and growth funds decreased to $99 billion and $95 billion, respectively
(15% and 14% of total dry powder), down from $109 billion and $99 billion in the previous year.
GPs are under pressure to deploy capital, but the uncertain macroeconomic outlook and intense
competition for high-quality deals continue to limit investments.
20
Figure 20: Dry powder grew to an estimated $676 billion in 2022, setting another record
Unspent private equity capital at Asia-Pacific-focused funds at year-end ($B)
CAGR
2015–22
24%
676
32%
564 7%
520
51%
373
331
271 33%
$148B 183
14%
11%
2015 16 17 18 19 20 21 22
Number
of years
1.1 1.1 1.5 1.8 1.9 2.5 2.5 2.9
of future
investment
Buyout Growth Venture Fund of funds Infrastructure Other
Notes: Other includes distressed and mezzanine funds and excludes real estate funds; number of years of future investment based on estimated growth of the
PE market (factoring debt)
Sources: Preqin; AVCJ
Returns still rising
Despite the sharp drop in dealmaking, exits, and fund-raising, Asia-Pacific PE returns rose to a new high
of a 15.0% median net internal rate of return, from 13.9% a year earlier. Top-quartile funds continued
to deliver robust returns well above expectations, at 25% median net IRR (see Figure 21).
But a turning point may be ahead. More than one-quarter of Asia-Pacific GPs we surveyed expect their
net returns to decline in the coming three to five years, due to increasing competition, weakening
portfolio performance, fewer exit options, and declining multiples in an uncertain macroenvironment.
Asia-Pacific funds’ net distribution to LPs in 2022 remained positive in the first three quarters of 2022
(see Figure 22). However, the return on public equity declined significantly in 2022, according to
Burgiss’ proprietary market index MSCI Asia PME. Private equity continued to outperform public markets
across 5-, 10-, and 20-year time periods.
Looking ahead, 49% of the GPs we surveyed said topline growth will be the most important factor
for generating strong returns in the next five years, up from 46% five years ago (see Figure 23). Cost
improvement will also be critical, given expectations for higher inflation. Our survey showed 23% of
GPs expect cost improvement to be the No. 1 factor affecting returns, up from 5% five years ago—the
biggest change in sentiment on this question. GPs said multiple expansion and leverage are now less
important than five years ago.
21
Figure 21: Asia-Pacific returns remained strong in 2022
Net internal rate of return for Asia-Pacific-focused Net internal rate of return for Asia-Pacific-focused
funds, all vintages funds, by vintage
30% 30%
Top-quartile
Top-quartile
funds
funds
20 20
Median
funds
Median
funds
Third-
10 10 quartile
Third- funds
quartile
funds
0 0
2016 17 18 19 20 21 22 2007 08 09 10 11 12 13 14 15 16
As of year-end Vintage year
Notes: Includes latest performance data available on Preqin (including December 2022); vintage year refers to year of initial investment; excludes real estate and
funds with no value or no available IRR; the chart for net IRR by vintage is as of January 6, 2022
Source: Preqin
Figure 22: LPs remained cash-positive in the third quarter of 2022; private equity continues to
outperform public markets
Cash flow for Asia-Pacific buyout and Asia-Pacific private equity vs. public market
growth funds ($B)
$35B End-to-end pooled net internal rate of return

(as of September 2022)
25
11% 11%
15 9%
8%
5
5%
5
15 2%
25
2010 11 12 13 14 15 16 17 18 19 20 21 Q1‒ 5 10 20
Q3
2022 Investment horizon (years)
Contributions Distributions Net cash flows Asia-Pacific buyout and growth funds MSCI Asia PME
Notes: Data for Asia-Pacific calculated in US dollars; PME is a proprietary private-to-public comparison from Burgiss that evaluates what performance would have
been had the dollars invested in private equity been invested in public markets instead
Source: Burgiss (as of December 20, 2022)
22
Figure 23: Asia-Pacific GPs expect cost efficiencies to play a bigger role in creating value for exits
For deals exited, what was the biggest driver of private equity returns? How do you see things
changing over time?
Share of respondents
External Internal
50%
40
30
20
10
0
Multiple expansion Leverage Topline growth Cost improvement M&A
and capital efficiency
Five years ago Now Five years from now
Note: The above view captures the share of the top-ranked factor
Source: 2023 APEG Survey (n=131)
Riding out the storm
Looking back in a couple of years, 2022 may seem an obvious turning point for Asia-Pacific private
equity investors. After a decade of vigorous growth and two years of resilience in the face of a shifting
global economy, most markets succumbed to a worsening macroeconomic storm, rising geopolitical
tensions, and ongoing disruptions related to the pandemic. The decade ahead will be less stable
and less certain than the previous one. But change brings new opportunities. Successful funds
already are adapting their investment strategies to a new era and building the skills to improve
portfolio performance.
23
Smart investing in a downturn
The macroenvironment for private equity investors in the Asia-Pacific region this year remains
difficult and uncertain. But economic downturns also create an opportunity to outperform. The best
PE funds follow a few key strategies in tough times.
The first is identifying recession-proof sectors and the top-performing companies within those sectors.
Next, these funds use scenario planning as a vital tool to understand the range of potential outcomes
for targets and portfolio companies. Finally, fund managers roll up their sleeves and help improve
portfolio performance.
Although the Asia-Pacific region is one large, dynamic market, macroeconomic uncertainty affects
each country differently. Before discussing strategies, let’s first take a high-level view of country-specific
outlooks and promising investment opportunities.
China
• The country’s growth rate is likely to accelerate in 2023 as it emerges from a period of Covid-related
setbacks and key economic sectors rebound. Despite a strong government commitment to revival,
the size of any recovery remains uncertain.
• In the wake of the US-China decoupling, China is focusing on developing the economic potential
of its huge internal market to power consumption. The government aims to support key industry
sectors, lower barriers for investors, and seek regional trade pacts. As it implements that strategy,
consumer confidence and export-based industries are likely to recover.
India
• The country’s large and relatively young population and a growing middle class help increase
India’s resilience against global economic headwinds.
• Key investment opportunities include infrastructure of all kinds, especially digital infrastructure.
The government’s Gati Shakti plan seeks to overcome long-standing obstacles to integrating and
coordinating digital investments nationwide. Education, healthcare, and other services urgently
24
need digital investment, especially in less-developed cities. Rising Internet use also is fueling
demand for better digital infrastructure.
Japan
• A weakening yen is good news for Japanese exporters and multinational Japanese firms; overseas
sales will generate a higher yen return. At the same time, a weaker yen allows companies to price
strategically to capture market share.
• Better corporate governance and increasing acceptance of private equity financing have improved
the environment for PE investing in Japan. As a result, the number of carve-outs, corporate
restructurings, succession deals, and activist interventions are rising.
South Korea
• Large conglomerates are creating robust demand for private equity through portfolio restructuring,
leadership succession, and global expansion. At the same time, many PE funds are seeking exits
through secondary sales to other funds.
• A sharp depreciation of the Korean won creates a window for US dollar-dominated funds to pick
up acquisitions at attractive prices.
Southeast Asia
• The region’s population of more than 600 million and rising income levels support steady economic
growth. Domestic markets such as Indonesia are sizable enough to support large enterprises.
Investments in economic development and a steady increase in disposable income will fuel
strong domestic consumption.
• Rising geopolitical tensions, increased labor costs in China, and disruption to China’s domestic
supply chain have made Southeast Asia, especially Vietnam, an attractive alternative location
for global supply chain nodes and manufacturing.
Australia
• Labor shortages are limiting growth in sectors with strong demand, such as healthcare (e.g.,
hospitals, aged care, diagnostic imaging, primary care) and early childhood education. But
companies that improve workforce productivity, for example, in business and industrial services,
will be highly attractive as deal activity recovers.
• The Covid-19 pandemic and an aging population create opportunities in healthcare, especially in
innovative, flexible, and digitalized healthcare service models. The government is also investing
in services for an aging society, including at-home care and residential care homes.
25
Pre-deal strategies
Even in a downturn, companies can accelerate growth and generate superior returns (see Figure 24).
The key for PE funds is to identify the right sectors and potential winners in those sectors. Above all,
top-performing funds incorporate scenario planning into the diligence process.
In the current macroeconomic climate, attractive sectors in the Asia-Pacific region include healthcare,
business services, infrastructure, and technology (see Figure 25).
Healthcare. Medical services and pharmaceuticals have been resistant to recessions historically, and
structural factors in the Asia-Pacific region, such as an aging population and increasing affluence,
continue to support growth in private healthcare services in countries like China and Japan. In
Southeast Asia, rising levels of income and broader consumer health awareness also are stimulating
the expansion of private healthcare businesses. India’s pharmaceutical services sector will benefit
from the China-US decoupling as global pharma companies shift contract research, development,
and manufacturing from China to India.
Business services. As companies confront labor shortages, many are turning to outsourcing. That’s
creating investment opportunities in business services such as business process outsourcing, facilities
management, and industrial and technology services. At the same time, the Ukraine crisis has increased
transportation costs and disrupted supply chains, boosting demand for distribution and logistics,
such as marine services.
Figure 24: Successful companies use a downturn to accelerate growth
Growth in nominal EBIT (indexed to 2007)
CAGR
Financial crisis After disruption Covid‒19 2007–20
600
14% Winners
Accelerated growth
15.6% 14.4%
400
200 Took
opportunities
14.3%
Losers
–15% –0.1%
Reacted late Struggled to bounce
1.4% 0.1%
0
2007 08 09 10 11 12 13 14 15 16 17 18 19 20
Notes: Data is global or all industries (excludes insurance); chart compares indexed weighted average of companies’ 2020 revenue and profit for sustained value
creators (SVCs) and non-SVCs per a 2020 analysis over the last decade; EBIT used for all industries except banking, which used EBT
Sources: S&P Capital IQ; Bain analysis
26
Figure 25: In the current macroeconomic climate, a company’s investment attractiveness will vary
more by sector and region
Greater China Japan South Korea India Australia Southeast Asia
Computer, technology,
and software
Consumer products
and retail
Financial services
Healthcare
Industrial goods
and services
Infrastructure
Telecommunications
Business services
High Low
Attractiveness for investors
Source: Bain & Company
Infrastructure. Market trends in several Asia-Pacific countries are creating attractive investment
opportunities in infrastructure. Aging infrastructure, government privatization programs in energy
and transportation, and a stable regulatory regime, for example, are encouraging infrastructure
investments in Australia and South Korea. The ongoing divestment of infrastructure assets by Korea’s
chaebol is also contributing to deal flow. Infrastructure PE deals in both countries have a track record
of strong returns.
In all Asia-Pacific markets, the energy transition is creating infrastructure investment opportunities
in generation assets such as solar or wind farms as well as logistics, including ports and energy storage.
Similarly, government plans to improve and extend digital infrastructure are boosting investment in
data centers and 5G networks.
Technology. Asia-Pacific technology and telecommunications companies based outside of China may
also benefit from shifting geopolitical winds. The US has already restricted the import of semiconductors,
artificial intelligence, big data subsectors, and telecom equipment from China. If restrictions on tech
exports from China continue, tech companies in other Asia-Pacific regions are likely to gain a share
of that business, especially semiconductor manufacturers in Japan and South Korea.
Spot the winners
Once leading PE firms identify the sectors likely to thrive in a downturn, they choose the companies
poised to outperform in their sector. That combination ensures high-quality investments that should
27
outperform through the economic cycle. The good news is that these winners may be available at more
attractive prices during a downturn.
Of course, assessing a target’s business fundamentals is even more important in a turbulent economy.
Two-thirds (66%) of Asia-Pacific GPs say solid business fundamentals and good cash flow are their
top criteria in selecting deals now.
Successful funds also use a set of winning factors and warning beacons to ferret out potential sources
of superior outcomes. Bain analysis shows PE deals that outperform have at least one winning factor
to counterbalance possible negative macroeconomic developments. These include rapid market growth;
organic sales growth in existing stores and rising market share; and expansion into new geographies,
products, channels, or adjacent markets. Other winning factors are acquisitions that make a target
more competitive, identifiable acquirers that ensure a viable exit strategy, and margin improvement
of more than 20% during a five-year holding period.
Once leading PE firms identify the sectors likely to thrive in a

downturn, they choose the companies poised to outperform in
their sector. That combination ensures high-quality investments
that should outperform through the economic cycle.
By contrast, PE deals that significantly underperform investors’ expectations typically possess one
or more warning factors. These include an unfavorable change in competitive dynamics, unforeseen
or underestimated disruption, and a misunderstood penetration curve. Other red flags are failure to
execute a merger or acquisition and unrealistic forecasts for margin improvement.
Scenario planning
In a tough macroeconomic climate, top-performing funds use the due diligence process to assess how
a variety of developments could affect a deal, operationally and financially. Inflation, for example, is
one critical element in scenario planning. By including a range of inflation rates in market forecasts,
investors can better understand how rising inflation can undercut growth.
When inflation is rising, successful funds follow a few key guidelines during due diligence. They start
by pressure testing a company’s ability to pass inflation costs to customers and suppliers. Next, they
evaluate how inflation might influence a target’s cost structure and how long inflation pressure might
last. Just as important, they assess the implications of an increase in working capital and capital
spending, a higher cost of capital, and tighter liquidity for cash flow.
28
Figure 26: Different scenarios for oil demand shaped forecasts of a target company’s market size
Oil-demand scenarios Corresponding market-size scenarios
Total oil demand Market size for global maker of microscopes

(Mbbl/d) (indexed to 100 in 2013)
125,000 200 Forecasts

High
demand
High Base
100,000
demand case
160 Low
Base
demand
75,000 case
Low
50,000 demand 120
25,000
80
0 0
2010 15 20 25 30 35 40 2018 19 20 21 22 23 24 25
Sources: International Energy Agency; World Energy Outlook 2020; Bain analysis
Take the case of a large global PE fund preparing a diligence on a maker of precision microscopes
that has key customers in highly cyclical industries such as oil and gas and semiconductors. Given
its customer base, the target’s performance is highly dependent on the business cycles of those end
markets, which in turn are affected by the macroeconomic environment.
A key step in the fund’s diligence was to model potential demand scenarios for each of the industries
the target serves and evaluate the implications on market and revenue forecasts. For the oil and gas
end market, the diligence team defined potential scenarios for oil demand (base case, low demand,
and high demand), taking into account macroeconomic factors such as global GDP growth and
industry-specific factors including the growing number of electric vehicles, demand from plastic
production, and plastics recycling. Based on the different scenarios for oil demand, the team calculated
three corresponding market forecasts (see Figure 26). That enabled the target to create action plans
tailored to low-, medium-, and high-growth scenarios, and to understand the company’s best
performance potential in each one.
Post-deal strategies
In turbulent times, leading fund managers revisit their portfolio plans. A poor macroeconomic climate
may make it prudent to delay exits, for example. Companies suffering from declining multiples or
deteriorating business performance are likely to generate lower-than-expected returns. In such a
29
climate, reassessing whether to sell or hold mature assets and creating a clear path with milestones
will help achieve targeted returns.
Top-performing funds navigate periods of economic uncertainty by improving the performance of

their portfolio companies. Value creation becomes paramount. Leaders know that winning companies
with the right strategy can outperform in a downturn, increasing their edge over rivals. Funds that
hold certain assets longer than anticipated strive to boost their value in the 18 to 36 months before exit.
Good planning starts with a realistic assessment of a portfolio company’s starting position. That includes
its strategic position based on market share, customer loyalty, and other metrics, and its financial
position, defined by balance sheet health, cost position, and recession sensitivity (see Figure 27).
As fund managers know, many actions can improve a company’s performance, including cost reduction,
investment, increasing revenue, shifting resources to core business activities, enhancing digital
capability, and bold strategic moves. The importance of any one action depends on the company’s
industry, strategy, and financial position. Successful funds analyze the potential for value creation
to determine which actions will work best for a specific company. In our experience, improving a
company’s cost position is highly effective for a range of situations (see Figure 28).
Macroeconomic developments will continue to pose a greater-than-usual risk to company performance

for the next 12 months and maybe longer. For investors, the challenge is to identify and focus on
Figure 27: Leading funds assess portfolio companies by their strategic and financial position in
the market
Strong
Play defense Play offense
Strategic position Pare back noncore products and Increase market share and revenues;
processes; focus on core strength aim for market leadership
Market share
Product portfolio
vs. competitors
Customer loyalty
Industry exposure to Go big or go home Invest to grow
recession or disruption
Sell all or parts of the business; Redefine the business around a defensible core;
launch aggressive cost transformation reset the cost base and balance sheet
Weak
Weak Strong
Financial strength vs. peers
Margins/unit-cost position Recession sensitivity Balance sheet/liquidity
30
Figure 28: Successful funds trace key metrics of value creation
Industry sensitivity Less More

Strategic position Strong Weak Strong Weak
Financial position Strong Weak Strong Weak Strong Weak Strong Weak
Full speed Play Invest Ride the Take no Manage Be Go big or

ahead offense to grow wave prisoners risk cautious go home
1 Reduce Improve cost performance

costs and
investments Tightly manage cash,
liquidity, and debt
2 Increase
Turbocharge sales
revenue
Set prices to help increase
margins or gain market share
3 Shift Clarify strategy: choose
resources where and how to win
to core Improve loyalty
business of core customers
activities
Strengthen the organization
Divest noncore assets
4 Transform Double down on digitalization

digitally
5 Conduct Pursue M&A, partnerships,
bold moves and exits
the few things that matter most for portfolio performance. Successful funds know that scenario
planning is vital in uncertain times. The range of potential outcomes is much wider today than most
businesses anticipate.
Leaders are taking a fresh look at their portfolio companies to see if the current macroeconomic climate
warrants a shift in strategy. Almost certainly, some assumptions that originally underpinned a value
creation plan no longer hold true. When the economic outlook darkens, the best funds redouble their
efforts to improve portfolio company performance. They monitor and manage cash on the balance
sheet, grow the top line through commercial excellence, and increase margins by managing costs and
implementing smart pricing strategies. That helps these winners prosper in challenging times.
31
Portfolio companies: fit for the storm
During the past decade, strong topline growth has helped power impressive returns for private
equity funds in the Asia-Pacific region. But an economic downturn is looming. Some fund managers
have navigated through tough times in the past, particularly industry veterans who had to steer
portfolios through the global financial crisis in 2008–2009. The initial outbreak of Covid-19 also
prompted fund managers to work more closely with portfolio companies to bolster their performance.
But most private equity investors in the region are facing their first sustained downturn, including
mounting pressure on deal economics.
Slower macroeconomic growth already is curbing portfolio company revenues. And for many deals,
exit multiples in the coming years are likely to be lower than they were at buy-in. The good news
is that the global PE industry has developed the skills to bring costs down and improve margins
when macroeconomic headwinds blow strong. The best-performing funds are already taking a more
hands-on approach with their portfolios to manage costs, improve margins, and bolster returns.
Slower macroeconomic growth already is curbing portfolio company

revenues. And for many deals, exit multiples in the coming years
are likely to be lower than they were at buy-in.
A recent Bain survey shows GPs expect cost improvement to become much more critical to
performance. More than half (54%) say it will be one of the biggest factors influencing deal returns
over the next five years, compared with 23% five years ago. However, reducing costs is tough. It’s
less reliable than topline growth targets as a source of value creation. Two-thirds of the investors
we surveyed said they meet topline targets on many or most deals, but only half of these investors
do so for margins (see Figure 29).
As GPs seek to manage costs, many plan to take a more active role in their portfolio companies.
While most funds have worked with portfolio leadership teams on cost reduction to some extent,
32
Figure 29: Asia-Pacific private equity deals are more likely to fall short on margins than on topline
growth targets
How often did you achieve targeted topline growth and margin expansion on exits in the past two
to three years?
Very rarely Very rarely

100% 0–5% of the time
Not that often
Not that often
5%–25% of the time
80 In some situations
In some situations 25%–50% of the time

60
In many situations
40
In many situations 50%–80% of the time
20
In most situations
In most situations More than 80% of the time
0
Topline growth targets achieved Margin expansion targets achieved
Source: Bain & Company Asia-Pacific Private Equity Report survey, 2023 (n=131)
their engagement has tended to be at a more strategic level, with less than a third saying they’ve
deployed teams in recent years to work intensively on some cost initiatives with the portfolio
company management. Now, 46% of the funds we surveyed are planning to take a very active role,
up from 27% in the past two to three years (see Figure 30).
Successful GPs start thinking about performance improvement before they buy an asset. They use
the due diligence exercise to identify areas for cost reduction and efficiency gains. In some cases,
funds may build an investment thesis around a cost-led transformation of the company, but more
often, they focus on reducing costs in one or two functional areas such as corporate support,
procurement, supply chain, manufacturing, or service design and operations.
With inflation at elevated levels across the region and supply chain disruption a continual risk,
senior executives are focusing much of their attention on procurement, corporate and overhead
costs, and supply chain efficiency (see Figure 31). Below, we take a close look at how leaders are
making significant gains in each of these areas.
Procurement
For every private equity investor, inflation has taken a toll on performance, raising input costs and
squeezing gross margins. While optimizing procurement can cut costs significantly, leaders carefully
33
Figure 30: GPs are aiming to get more involved in cost-reduction initiatives
How actively do you work with portfolio companies on cost reduction?
100%
Not active Not active Not a focus area
Limited Some board-level guidance
80 Limited
Active Some strategic initiatives working

60 with management
Active
40
20 Very active Portfolio team working with companies

on extended projects as a priority
Very active
0
Past two to three years Next two to three years
Figure 31: To improve portfolio company performance, GPs are targeting corporate support
and procurement
Where do you see the greatest potential for cost reduction and performance improvement?
Corporate support, overhead 74%
Procurement 49
Supply chain 40
Service cost 29
Manufacturing 17
Note: Respondents could choose as many as three options

34
consider how changes might affect supply chain risk and the customer experience. For example,
when a PE-owned electronics company in Japan faced rising input costs on key components
such as printed circuit boards and capacitors—as well as ongoing supply chain disruptions from
Covid-19—the leadership team decided to assess the potential for savings from renegotiating
supplier contracts.
Using an analytical approach based on benchmarking and clean-sheet costing, a company can break
manufacturing cost into its component parts and estimate a fair cost as a basis for negotiating with
suppliers (see Figure 32).
Once the team identified a set of initiatives with the highest potential savings, it set up a task force
to chart progress on each one, including negotiation developments and final outcomes. The task
force also used cutting-edge software tools to identify further cost-reduction opportunities.
Targeted negotiations helped the company renegotiate existing contracts on components such as
semiconductors and displays within weeks of the initial project, with many contracts yielding higher-
than-expected savings. Had the leadership team not acted, inflationary pressure would have triggered
cost increases.
More broadly, the team’s effort analyzing its procurement processes prompted a shift in mindset
and big efficiency gains in purchasing and supplier management. In total, the company
Figure 32: Clean-sheet costing at an electronics company revealed a wide scope to renegotiate
component costs
Component cost breakdown vs. current price (indexed to 100)
33 100
6 67
9
6
21
5
20
Primary raw Secondary Processing Yield Transport Profit Fair cost Additional Current
materials raw materials costs loss cost margin premium price
Source: Bain analysis
35
identified $10 million in savings opportunities. Category managers, eager to replicate the
positive results in other purchase areas, started to regularly identify negotiation opportunities
in procurement.
Supply chain
Covid-related supply chain disruptions have prompted many leadership teams to rethink their networks
and increase supply resilience. In fact, supply chain optimization can reduce costs by making fulfillment
more efficient and reducing working capital requirements. It also can bolster topline growth by
improving service. Take the case of a global private equity firm that acquired a pharmaceutical
company in India with the goal of building leading industry platforms for active pharmaceutical
ingredients and contract development and manufacturing. As a first step, the fund implemented a
cost-optimization program to improve procurement, manufacturing, and supply chain efficiency.
Addressing the supply chain, the fund manager launched several initiatives in logistics. A route-by-
route benchmarking exercise identified opportunities to trim costs in air and sea freight (see Figure 33).
The optimized road transport analysis included truck size and utilization, packaging, dispatch
frequency, and reverse logistics for returns, recalls, and recycling.
The company is now working on a plan to realize the savings, optimize further, and improve
supply chain resilience. The leadership team’s goal is a more accurate and integrated view of
Figure 33: Benchmarking identified significant savings opportunities at a pharmaceutical company
Current freight rate vs. benchmark rate for highest-volume routes
18%
savings Benchmark
opportunity freight
rate
27%
savings
opportunity
Current
freight
Route Route Route Route Route Route Route Route Route

1 2 3 4 5 6 7 8 9
Share
of total 12% 10% 7% 7% 5% 5% 4% 4% 3%
volume
Source: Bain analysis
36
demand forecasting, inventory management, and sales and operations planning to improve cost
management and reduce the risk of supply chain disruptions.
Corporate support
Every fund manager knows that reducing general and administrative costs can expand margins and
boost returns. But optimizing support functions also can create value beyond cost savings, including
speed, accuracy, and innovation. Automation can help bring about those gains.
When a global PE fund acquired an Asia-Pacific regional airline in the wake of Covid-19, it had to move
fast to transform costs in order to survive the collapse in air traffic and reshape operations to thrive in
the long term. The fund launched multiple cost and topline initiatives, redesigned the organization,
and set up a transformation and results delivery office.
Every fund manager knows that reducing general and administrative

costs can expand margins and boost returns. But optimizing support
functions also can create value beyond cost savings, including
speed, accuracy, and innovation. Automation can help bring about
those gains.
One of the most successful initiatives was a zero-based redesign of head office costs, which had built
up significantly and outstripped those of peers. The leadership team first reviewed all the company’s
activities and how they were performed, then established an optimal size for each function and
subfunction. The process led to a one-time reduction of cost and complexity, particularly in the
sales function, which was restructured into smaller groups with fewer spans and layers.
In the wake of Covid, the company reduced headquarters staff in order to maintain a constant level of
workers per aircraft, a move that reduced costs by 40%. Cost leaders know it’s critical to base headcount
reductions on an effective redesign rather than simple benchmarking. Companies that fail to think
through the implications may find the organization unable to perform some critical tasks or suffering
from quality problems.
When redesigning an organization or a function, successful companies assess which tasks would be
more efficient if automated. By conducting an expert review of more than 70 processes in six functions,
the airline company identified 100 subfunctional activities that could be automated, allowing the
same functions to be carried out at lower cost. The performance improvement program continued
to bolster the bottom line when flight activity rebounded. New structures and processes allowed
37
the airline to increase capacity when travel restrictions were eased, without adding to headcount—
and laid the foundation to generate new efficiencies as the company grows.
For many PE firms investing in the Asia-Pacific region, taking a hands-on approach to improving
portfolio company performance may seem arduous. However, the macroeconomic winds are no
longer providing companies in the region with a powerful tailwind. In the coming years, PE funds
that excel at improving cost management and efficiency in their portfolio companies will be able to
create value even during a downturn. Top-performing funds have already started down that path.
38
Market definition
The Asia-Pacific private equity market as defined for this report
Includes:
• Investments and exits with announced value of more than $10 million
• Investments and exits completed in the Asia-Pacific region: Greater China (China, Taiwan, Hong
Kong, and Macau), India, Japan, South Korea, Australia and New Zealand, Southeast Asia
(Singapore, Indonesia, Malaysia, Thailand, Vietnam, the Philippines, Laos, Cambodia, Brunei,
and Myanmar), and other countries in the region
• Investments that have closed and those at the agreement-in-principle or definitive agreement stage
Excludes:
• Franchise funding, seed, and R&D deals
• Any non-PE, non-VC deals (including M&A and consolidations)
• Real estate and real estate investment trusts
About Bain & Company’s Private Equity business
Bain & Company is the leading consulting partner to the private equity (PE) industry and its stakeholders.
PE consulting at Bain has grown eightfold over the past 15 years and now represents about one-third of the
firm’s global business. We maintain a global network of more than 2,000 experienced professionals serving
PE clients. Our practice is more than triple the size of the next-largest consulting company serving PE firms.
Bain’s work with PE firms spans fund types, including buyout, growth equity, infrastructure, real estate,
and debt. We also work with hedge funds, as well as many of the most prominent institutional investors,
including sovereign wealth funds, pension funds, endowments, and family investment offices. We
support our clients across a broad range of objectives:
Deal generation. We work alongside investors to develop the right investment thesis and enhance
deal flow by profiling industries, screening targets, and devising a plan to approach targets.
Due diligence. We help support better deal decisions by performing integrated due diligence, assessing
revenue growth and cost-reduction opportunities to determine a target’s full potential, and providing
a post-acquisition agenda.
39
Immediate post-acquisition. After an acquisition, we support the pursuit of rapid returns by developing
strategic blueprints for acquired companies, leading workshops that align management with strategic
priorities and directing focused initiatives.
Ongoing value addition. During the ownership phase, we help increase the value of portfolio companies
by supporting revenue enhancement and cost-reduction initiatives and refreshing their value-
creation plans.
Exit. We help ensure that investors maximize returns by preparing for exit, identifying the optimal
exit strategy, preparing the selling documents and prequalifying buyers.
Firm strategy and operations. We help PE firms develop distinctive ways to achieve continued
excellence by devising differentiated strategies, maximizing investment capabilities, developing sector
specialization and intelligence, enhancing fund-raising, improving organizational design and decision
making, and enlisting top talent.
Institutional investor strategy. We help institutional investors develop best-in-class investment programs
across asset classes, including private equity, infrastructure, and real estate. Topics we address cover
asset class allocation, portfolio construction and manager selection, governance and risk management,
and organizational design and decision making. We also help institutional investors expand their
participation in private equity, including through coinvestment and direct investing opportunities.
Bain & Company, Inc.

131 Dartmouth Street
Boston, Massachusetts 02116 USA
Tel: +1 617 572 2000
www.bain.com
40
Bold ideas. Bold teams. Extraordinary results.
Bain & Company is a global consultancy that helps the world’s most
ambitious change makers define the future.
Across 65 cities in 40 countries, we work alongside our clients as one team with a shared ambition to
achieve extraordinary results, outperform the competition, and redefine industries. We complement
our tailored, integrated expertise with a vibrant ecosystem of digital innovators to deliver better, faster,
and more enduring outcomes. Our 10-year commitment to invest more than $1 billion in pro bono
services brings our talent, expertise, and insight to organizations tackling today’s urgent challenges
in education, racial equity, social justice, economic development, and the environment. Since our
founding in 1973, we have measured our success by the success of our clients, and we proudly maintain
the highest level of client advocacy in the industry.
For more information, visit www.bain.com

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Asia-Pacific Private Equity Report 2023

After a turbulent year, investors brace for more uncertainty.

This report was prepared by:

Copyright © 2023 Bain & Company, Inc. All rights reserved.

Economic turmoil, global tensions, and a new era of

What happened in 2022? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Deals: a dramatic fall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Sector view: Internet and tech out in front . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Returns still rising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Riding out the storm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Smart investing in a downturn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Spot the winners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Portfolio companies: fit for the storm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Economic turmoil, global tensions, and a new era of

Asia-Pacific private equity Asia-Pacific private equity Asia-Pacific-focused closed

Deal count Exit count

3,000 199 $352B 347

Note: Excludes real estate

The macroeconomic landscape remains unstable, and higher

Figure 2: Asia-Pacific economies face growth and stability challenges

Slowing growth Higher inflation Weakening

300bps 2% Southeast Asia 8% 15% 10%

Investors, sensing a new era of slower growth, mounting inflation,

Deals: a dramatic fall

Asia-Pacific private equity investment value, by market ($B)

2017‒21 average 2021 2022

Note: Excludes real estate

Share of Asia-Pacific private equity deal value

$106B 217 198

Share of Asia-Pacific investment value, by deal type

Growth deals’ 39% 59% 56% 56% 50% 54%

By contrast, start-up and early-stage deal value grew 3% year-on-year.

Share of Asia-Pacific investment value, by deal type, 2022

$62B 45 38 21 20 13 Turnaround and

Share of buyout 9% 21% 70% 76% 34% 21%

Sector view: Internet and tech out in front

Percentage of Asia-Pacific deal value, by sector

100% Other industries

40 Energy and natural resources

Number of active firms investing in the Asia-Pacific PE market

If the conditions—macroeconomic uncertainty, poor company performance, and a decline in deal

Percentage of Asia-Pacific deals involving specific investor groups, weighted by value

2017 2018 2019 2020 2021 2022

Figure 11: Asia-Pacific deal multiples declined in 2022

Median EV/EBITDA multiple on Asia-Pacific private equity-backed M&A transactions

Figure 12: Asia-Pacific exit value in 2022 dropped by one-third

Asia-Pacific private equity exit value ($B)

IPO Trade Secondary Exit count

Note: Excludes real estate

Asia-Pacific private equity exit value, by market ($B)

2017‒21 average 2021 2022

Note: Excludes real estate

Share of Asia-Pacific private equity exit value, by region

$99B 134 132

Note: Excludes real estate

By comparison, Asia-Pacific fund-raising slumped even more dramatically. Asia-Pacific-focused-funds

Rest of the world

Note: Excludes real estate

Asia-Pacific-focused private equity capital raised, by final year of close ($B)

Greater China (renminbi-denominated) Greater China (other currency)

Note: Excludes real estate

Time to close (months)

First half Second half