KUALA LUMPUR – The recent advancements in Malaysia’s digital banking sector, which saw five consortiums obtaining digital bank licences, are set to attract more foreign investors to the country.
Usman Akhtar, partner and head of Bain & Company’s private equity practice in Southeast Asia, said digital banking is poised to attract investors, similar to other global markets.
“Digital banking has attracted investment interest in multiple markets, and we can assure you that there is no shortage of investors who are excited about digital financial services.
“Digital banking would be an investable theme in the future, and we must keep an eye out for it,” he said in a question-and-answer session during a media briefing on the company’s annual Southeast Asia private equity report today.
Over the years, the internet and technology sectors accounted for the lion’s share of deal volume and value across the larger Asia Pacific private equity landscape.
Within Southeast Asia, the digital economy continues to roar ahead as tech-centric investment remains to be dominant in Indonesia (60% of deal count) and leads growth in both Singapore (50% of deal count) and Vietnam (55% of deal count).
Other sectors like healthcare and financial services are beginning to take a noticeable share as investing targets, representing 18% and 9.0% of deal count, respectively.
Commenting on private equity trends in Malaysia, senior advisor to Bain’s global private equity business Suvir Varma said in contrast to Singapore, Vietnam and Indonesia, private equity activities in Malaysia are less active, though they continue to attract foreign investments.
“We continue to see occasional transactions in the consumer product space, precision engineering logistics and e-commerce facilitated logistics centre, but investors see more attractive growth-oriented investment opportunities in other Southeast Asian markets,” he added.
According to the annual report released today, Southeast Asian private equity investment deal value stood at US$25 billion (RM109 billion) in 2021, and compared with the five year average, Singapore rose 108%, followed by Indonesia (up 310%), Vietnam (gained 91%) and Malaysia (contracted 7.0%.)
On overall performance, the Southeast Asian private equity market had one of the most impressive turnarounds in its history, with deal value reaching an all-time record high of US$25 billion – more than double the 2020 figures.
The previous year had seen a significant slowdown, with the market recording the largest fall across all Asia Pacific markets due to travel restrictions hampering deal-making and diligence processes, but the progressive opening-up of countries in the second half of 2021 helped drive a rebound in deal value.
Usman said Southeast Asia as a region has bounced back strongly from the Covid-19-impacted year in 2020, with 2021 activity levels showing that investors were keen to make up for lost time.
Asia Pacific now makes up over a quarter of the global private equity market, and in 2021, surging investor confidence in Southeast Asia resulted in the largest growth in the deal volume of any country in the Asia Pacific Accreditation Cooperation, and was only behind Japan in deal value growth. – Bernama, May 10, 2022
