Bain & Co: Exit crunch tempers SE Asia private equity rebound
Southeast Asia’s (SEA) private equity (PE) market stayed subdued in 2025, with recovery limited to a handful of large deals, according to Bain & Company.
Bain’s SEA PE Report 2026 showed that deal value fell about 10 percent year on year to roughly $14 billion across 84 transactions, reflecting cautious capital deployment and a narrow pipeline of high-quality assets.
The report also showed that capital remained available, but investors have become more selective, focusing on assets with strong management teams, clear competitive advantages and defined exit pathways.
“The SEA PE market is stabilizing, but the recovery is narrow and shaped by exit constraints,” said Tom Kidd, head of Bain’s SEA PE practice. “Capital is concentrating in fewer deals, and investors are more selective than at any point in recent years, with a clear focus on assets that can deliver value through execution.”
Large transactions accounted for a disproportionate share of total value, underscoring how capital is concentrating in fewer deals amid persistent market uncertainty.
Exits remained the region’s biggest constraint. Exit value declined 32 percent in 2025, with holding periods stretching beyond historical norms as liquidity conditions remained tight.
Trade sales continued to dominate exit routes, while initial public offering activity showed early signs of recovery. Secondary transactions are also gaining traction as funds seek alternative liquidity options.
Singapore anchored regional activity, accounting for about $7 billion in deal value, while Malaysia posted the strongest year-on-year growth, reaching $5.3 billion.
However, exit activity stayed muted. Singapore recorded just four exits in 2025, while Vietnam reported none, highlighting the difficulty of completing transactions in the current environment.
Sector preferences have shifted in recent years. Investments in internet and technology moderated, while aviation, communications and media and financial services gained share.
Health care remained a key focus, with deal value rising about 60 percent over the past five years, driven by platform-building strategies and consolidation efforts.
Interest is also rising in digital infrastructure, particularly data centers, where capacity in SEA is projected to expand by more than 20 percent annually due to hyperscaler demand and low cloud adoption.
Operational value creation has become the main driver of returns as exit timelines lengthen. Funds are focusing on earnings before interest, taxes, depreciation and amortization growth through cost optimization, pricing strategies and commercial improvements.
Artificial intelligence is increasingly embedded in the investment process, with more than 70 percent of investors reporting its use in diligence or portfolio management, though its impact remains at an early stage.
Bain said investors across Asia-Pacific remained cautious, citing exit challenges, fundraising pressure and limited deal flow as key concerns.
“As exit timelines extend, funds need to work harder to generate attractive returns,” said Suvir Varma, advisory partner to Bain’s Global Private Equity practice. “Success will depend on having a clear investment thesis, focused sector expertise and strong operational capabilities.”
