Southeast Asia PE Deal Value Plummets 43% to $9.1B in 2025
Private equity deal value in Southeast Asia plummeted 43% to $9.1B in 2025 as geopolitical uncertainty and tariff concerns drove investors toward smaller, selective transactions. Singapore captured...
Private equity deal value in Southeast Asia fell 43% to US$9.1 billion in 2025, down from US$16 billion the previous year, according to EY's Southeast Asia Private Equity Pulse 2025 report released Tuesday. The contraction reflects a fundamental shift in investor strategy as geopolitical uncertainty drove capital toward smaller, more selective transactions.
The region recorded 59 deals in 2025 compared to 67 in 2024, representing a 12% decline in transaction volume. Average deal size dropped from US$356 million to US$267 million as investors pivoted away from large-scale acquisitions.
Megadeals nearly halve as caution takes hold
The number of megadeals valued above US$1 billion nearly halved, falling to four transactions in 2025 from eight in 2024. Luke Pais, EY-Parthenon Asean private equity leader, attributed the pullback to concerns over potential US tariffs and broader geopolitical volatility.
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"Geopolitical volatility and concerns over potential US tariffs led to more cautious investor sentiments seen in Q2," Pais said.
Despite the slow start, Q3 2025 emerged as the year's most active deployment period. Pais noted the rebound reflected "a shift towards larger, more selective transactions as valuations stabilized and financing conditions improved."
Singapore captured over 74% of total Southeast Asia private equity value in 2025, reinforcing its position as the region's financial anchor during economic uncertainty. Digital infrastructure dominated investment activity, accounting for 42% of total deployment, followed by telecommunications at 12%. Real estate and energy each represented approximately 10% of deal value.
Fundraising surges despite deal slowdown
While deal activity contracted, fundraising demonstrated resilience with 10 private equity fund closes raising US$4.6 billion in 2025. This represented a 97% year-on-year increase and captured 14% of Asia-Pacific regional fundraising, signaling sustained confidence in Southeast Asia's long-term potential.
Exit activity generated US$4.4 billion across 33 deals, with transaction volume increasing 18% year-on-year. However, aggregate exit value declined 47%, reflecting a trend toward smaller-scale sales and longer asset holding periods.
The divergence between declining deal values and surging fundraising indicates limited partners maintained strategic commitment to the region despite near-term headwinds. Fund managers now hold significant capital reserves positioned for deployment as market conditions stabilize.
Private credit poised for expansion
The private credit market is expected to expand significantly in 2026 as stricter bank lending regulations push mid-sized companies toward alternative financing sources. Digital infrastructure and renewable energy sectors are positioned as primary beneficiaries of this shift.
"Private credit offers a compelling diversification opportunity for investors, delivering superior returns compared to traditional bonds," the EY report stated. Borrowers increasingly favor flexible, custom-built private credit loans with lighter financial restrictions compared to traditional bank financing.
Growing investments from local pension funds and insurance companies, combined with international investor participation, are expected to strengthen market transparency and support broader activity across sectors in 2026. The report projects accelerated exit momentum as the capital cycle strengthens, potentially revitalizing deal activity after 2025's contraction.
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