Last year demands for exports from many Asian countries dropped, economic growth stagnated and foreign direct investment, including from private equity, fell. However, Anubha Shrivastava (pictured), MD of CDC Group’s Asia Team, sees cause for optimism in 2010.
Overall in 2010, I would expect the environment for private equity fundraising in Asia to be more positive than last year, with fund managers who have held back from raising funds in 2009 now coming forward. Investors active in Asia, such as CDC, expect to scrutinise more funding proposals and we might also expect to be joined by investors traditionally focused on established markets now wishing to diversify.
South Asian economic hubs, particularly India, remain fundamentally strong investment destinations, requiring significant investment whilst offering the prospect of good returns over the medium-long term. In 2010, India should see increased investment – including from private equity.
One area where we might see more investment from private equity firms is in distressed debt funds – supporting corporate companies which have suffered reduced access to credit, many of which now struggle to service their debts.
There are a number of sectors where good investment opportunities lie, including infrastructure and healthcare – here we see strong opportunities for growth. In addition, we might expect the emergence of more specialised single sector funds, such as education,
South Asian economies with historically limited private equity investment, such as Bangladesh, might also benefit from greater private equity investment – particularly in growth sectors such as textiles. However, concerns remain over corporate governance in the country.
In south-east Asia, we see a lot of under-tapped investment potential and positive regulatory changes which can help facilitate investment.