At a time of escalating geopolitical tensions and huge macroeconomic challenges, the private equity & venture capital (PEVC) sector continues to support the digital transformation of key industries and fuel the development of new ideas in the Asia-Pacific, according to data provider Preqin’s September 2020 Markets in Focus report.

As the interconnected region continues to develop there remains a significant need for capital, and to meet this expanding opportunity set, Asia-Pacific-focused PEVC assets under management (AUM) have surged in recent years to a record-high US$1.3 trillion as of December 2019, a 34% increase from a year prior.

In fact, PEVC is driving innovation across the Asia-Pacific, where growth technologies are attracting investors’ interest. The e-commerce sector has boomed across the region in the past five years – PEVC investment reached US$128 billion in aggregate deal value between 2015 and 2019, and reached a nine-year high of US$35 billion in 2018 alone.

Venture-backed deals in artificial intelligence (AI) companies have also become more common, with deal-makers completing a record-breaking 861 transactions in 2019. And, in H1 2020, there have already been 400 deals made.

Within the region, private capital has flooded into ASEAN to back innovative fintech start-ups. Of the US$8.3 billion in total fintech deal value in the Asia-Pacific for 2019, US$4 billion (48%) was held in the ASEAN region, up 12x on the US$348 million transacted just five years prior in 2014.

The region is also on route to a future driven by Internet of Things (IoT) technologies – between 2015 and 2019 the number of Asia-Pacific IoT venture capital deals grew at a CAGR of 38%, while aggregate deal value registered a CAGR of 86% over the same period. In 2019 a record high of 314 deals were completed with an aggregate deal value of US$7 billion.

“Fundraising and dealmaking in Asia-Pacific have been hampered by Covid-19 in H1 2020, sinking notably compared to the same period last year,” says Dave Lowery, head of research insights at Preqin. “Nonetheless, the region’s PEVC AUM is at an all-time high and activity is becoming more geographically diverse within the region, which is bringing new and fresh opportunities to the market. Investors are seeing the opportunity and the Asia-Pacific market is growing fast.” 

Source: The Asset

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