South-east Asia private equity deal value down 43% in 2025: EY

[SINGAPORE] Private equity (PE) deal value in South-east Asia fell 43 per cent and deal volume dropped 12 per cent in 2025 as investors grew more cautious amid geopolitical volatility.

A total of US$9.1 billion was deployed in 59 PE-backed deals, down from US$16 billion across 67 deals in 2024, according to EY’s Southeast Asia Private Equity Pulse 2025 report released on Wednesday (Feb 11).

There were four megadeals – deals valued at more than US$1 billion – in the region last year, compared with eight in 2024. Among the deals where values were disclosed, the average size fell to US$267 million from US$356 million.

Digital infrastructure accounted for 42 per cent of PE investments, followed by telecommunications at 12 per cent, then real estate and energy at about 10 per cent each.

“While 2025 started with robust activity in Q1, geopolitical volatility and concerns over potential US tariffs led to more cautious investor sentiments seen in Q2,” said Luke Pais, EY-Parthenon Asean private equity leader.

However, PE investment activity in South-east Asia rebounded in the third quarter, which was the most active deployment period in 2025.

This reflected “a shift towards larger, more selective transactions as valuations stabilised and financing conditions improved”, Pais noted.

He added that Singapore continued to be a “regional anchor”, accounting for over 74 per cent of total PE value and underscoring its role as a safe haven for capital in times of uncertainty.

Fundraising momentum builds

In terms of fundraising, EY said South-east Asia remained a “strategically important allocation market in Asia-Pacific”, accounting for 14 per cent of PE fundraising in the region.

There were 10 PE fund closes in South-east Asia last year, which raised a total of US$4.6 billion, up 97 per cent year on year.

Conversely, exit values took a hit. The region recorded 33 deals generating US$4.4 billion in realised proceeds in 2025. While deal volume increased 18 per cent year on year, aggregate exit value declined by 47 per cent, reflecting “a skew towards smaller, lower-value realisations”.

General partners held assets for longer, but the increase in exit momentum is expected to “further accelerate” in 2026, which will get the capital cycle flowing faster, EY said.

Private credit set to scale

South-east Asia’s private credit market is set for growth in 2026, driven by “sustained demand from mid-market corporates and financial sponsors amid tighter bank lending conditions”.

“Solid domestic demand and continued digital economy expansion are creating lending opportunities across sectors,” EY noted, citing “digital infrastructure, real estate-intensive businesses such as healthcare and education, fintech and renewable energy” as examples.

Pais said digital infrastructure and renewables are expected to remain “primary beneficiaries”, pointing to the increasing convergence between compute growth and clean-power solutions.

“We also expect to see more broad-based activity compared to 2025, with significant transactions in other sectors,” he added.

EY also found that borrowers are “increasingly comfortable to pay a premium in exchange for a customised transaction with lighter covenants”.

At the same time, “rising allocations from local pension funds and insurers, alongside growing cross-border interest in unitranche, mezzanine and structured credit, are supporting market depth”.

“Ongoing regulatory reforms and improvements in credit infrastructure are expected to further reduce information asymmetries and support the scaling of private credit strategies across the region,” EY added.

Said Pais: “Overall, private credit in South-east Asia offers compelling diversification benefits with attractive spreads above traditional fixed income, particularly for tranches addressing underserved segments of the capital stack.”