Southeast Asia private equity demonstrates strong activity in Q1 2025, while headwinds build

• US$2b was deployed across 14 PE-backed deals in Q1 2025, with deals centered on energy, consumer and financial services sectors
• PE-backed exits were valued at US$679m across five deals 

Southeast Asia (SEA) saw a good start in private equity (PE) investment in the first quarter of 2025. There were 14 PE-backed investments worth US$2b, compared with 12 deals worth US$0.3b in Q1 2024. While deal volume saw a modest 1.2 times increase, deal value surged 5.5 times year-on-year. 

This is according to the EY Southeast Asia Private Equity Pulse (Q1 2025), which provides a roundup of PE deals along with capital activities across major sectors in the region, from January to March 2025.

In Q1 2025, the energy sector accounted for close to half (49%) of these investments, driven by a mega deal. Consumer (28%) and financial services (15%) were the next most active sectors. 

The region recorded five exits generating US$679m in realized proceeds. Notably, Q1 2025 saw the first PE-backed IPO since 2023.

Luke Pais, EY-Parthenon Asia-Pacific Private Equity Leader, says: 
“Amid geopolitical and macroeconomic uncertainties, deal activity and exits are expected to slow over the next few quarters. PE firms should work with portfolio companies to uncover the risks and opportunities across areas such as customer demand, supply chain, manufacturing, currency volatility and tax exposure.”

Tariffs trigger investment shifts

According to the EY publication, the impact of the US tariffs on SEA countries remains uncertain. SEA markets, which had previously benefited from the China+1 strategy, where manufacturers diversified their operations from Greater China, may now see a reorientation of foreign investment across the region. 

Globally, 87% of general partners (GPs) were helping their portfolio companies assess the potential impact of new tariffs on their supply chains, and 57% reported that they were evaluating their portfolio companies' manufacturing footprints as part of their current strategy to prepare for the expected tariff increases.

Pais remains optimistic about the region’s long-term growth trajectory despite near-term uncertainties. He adds: 
“Asia’s resilience and long-term fundamentals remain strong. The private capital market continues to offer opportunities, and today’s volatility can present high-quality investment opportunities for PE.”

Imperatives amid an evolving landscape

The EY publication highlights the fund and portfolio imperatives that GPs should consider:

• Consider a programmatic or centralized approach to monitor geopolitical developments, track tariffs and adjust investment portfolios.

• Ensure portfolio resiliency through scenario planning around operational efficiency, supply chain agility, cost control and optimal capital structure. Talent is also an important consideration as portfolio companies need talent with both growth and crisis management skills.

• Consider whether sale processes and exit timelines need to be adjusted based on exposure to tariff-related risks. Potential buyers will expect an impact analysis.

• Be on the lookout for investment opportunities that might arise from the ongoing volatility and seek out selective, sector-focused investments. Given that the IPO market may be challenging over the next few months, opportunities for private capital may arise.

• At the GP level, ensure that fund documents contain enough flexibility to allow for reallocation of capital in response to disruptions, and assess and understand currency exposures. 

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