Southeast Asian limited partners (LPs) are emerging as a formidable force in private capital markets, with a growing inclination towards private equity and debt.
The percentage of LPs from the region investing in private equity has risen from 66% in 2020 to 77% by mid-2024. Meanwhile, private debt allocations have inched up from 26% to 31% over the same period, highlighting a broader engagement with alternative asset classes, according to investment data firm Preqin’s latest LPs in Southeast Asia factsheet.
Family offices, in particular, are making significant inroads. Their representation among Southeast Asian LPs has expanded from 20% in 2020 to 33% by June 2024. This growth is a testament to the increasing wealth in the region, where high-net-worth individuals are establishing family offices to preserve and grow their assets.
Singapore’s favourable policies, including the variable capital company structure, have attracted many of these family offices, bolstering the city-state as a hub for private wealth management in Asia.
Though few in number, sovereign wealth funds (SWFs) in Southeast Asia have also played a crucial role in this expansion. For instance, Singapore’s Temasek Holdings, one of the world’s biggest and most active investors, has significantly ramped up its allocation to unlisted assets, which currently make up 52% of its US$290 billion portfolio, up from 20% two decades ago.
Similarly, Malaysia’s SWF, Khazanah Nasional, has maintained a steady 20% allocation to private markets, increasingly directing funds to global private markets. These SWFs underscore the strategic shift towards private markets as a means of achieving higher-than-expected long-term returns.
Broad-based growth
Beyond family offices and SWFs, corporate investors, asset managers, banks and insurance companies in Southeast Asia are also actively increasing their exposure to alternatives. This collective push by various LPs is not only boosting private capital growth within the region, but also influencing global markets.
In a noticeable shift in focus from global markets – and amid global uncertainties in private equity valuations and venture capital exit pathways – Southeast Asian LPs have increasingly focused their investment plans on the Asia-Pacific region.
In private debt, venture debt strategies are gaining traction, while real estate and infrastructure investments are also on the rise, reflecting a broad-based growth in alternative assets across the region. Compared with last year, a slightly higher percentage of Southeast Asia investors reported that they are investing or considering investing in real estate in the next 12 months, up by three percentage points.
“In addition to family offices and SWFs, there have been more corporate investors, asset managers, banks and insurance companies actively investing in alternatives in Southeast Asia,” says Valerie Kor, lead author of the Preqin report. “As these investors aim for long-term risk-adjusted returns, they continue to drive private capital growth both locally and globally.”
