Private equity briefing: Southeast Asia - May 2019 - EY

 
Private equity briefing: Southeast Asia - May 2019 - EY
Private equity
briefing:
Southeast Asia
May 2019

                 Private equity briefing: SEA   1
Private equity briefing: Southeast Asia - May 2019 - EY
This briefing offers you a
roundup of the private equity
and venture capital deals
along with capital activities
across major sectors in the
quarter and trends that are
shaping investment decisions
today.
It distills the perspectives of
the teams of subject-matter
professionals in the region
into pertinent insights to
keep you ahead in navigating
the private equity landscape.

                                  Private equity briefing: SEA   2
Private equity briefing: Southeast Asia - May 2019 - EY
Contents
1
Outlook
              2
              Investments
                                 3
                                 Exits
                                              4
                                              Fundraising
                                                                 5
                                                                 Diversified
                                                                                    6
                                                                                    Risk and
                                                                                                     7
                                                                                                     Our Private
                                                                 Industrial         compliance       Equity (PE)
                                                                 products           challenges       service
                                                                                    in emerging      offerings
                                                                                    markets
4         6                 11           14                 16                 22                 26

                                                                                        Private equity briefing: SEA   3
Private equity briefing: Southeast Asia - May 2019 - EY
1                                 Outlook

PE and Venture Capital (VC) investment activity across Southeast Asia (SEA)
delivered a strong performance in 2018 with a total US$14.1b worth of announced
deals. Dry powder reached record levels, and 2019 is off to a relatively sedate
start with the announcement of deals worth over US$2.2b till February.
In terms of investment activity, PE investment declined in 2018 with 69 announced deals, valued at US$8.9b1,
compared to 90 announced deals worth US$17.5b2 in 2017. VC investment increased in 2018 with 311 announced
deals, valued at US$5.2b1,compared to 230 announced deals worth US$4.1b2 in 2017.

Exit value for PE declined sharply from US$20.7b3 in 2017 to US$7.3b4 in 2018 while PE exit count declined from 41
announced exits in 2017 to 32 exits in 2018. As well, VC exits declined steeply from US$1.7b3 in 2017 to US$0.1b4 in
2018 while VC exit count declined from 13 announced exits in 2017 to six exits in 2018.

Unicorns based out of Indonesia (Go-Jek, Tokopedia) and Singapore (Grab) dominate the league tables in 2018 with
deals of more than US$1b raised as growth capital. Vietnam-based companies, Techcombank (financial services) and
Vinhomes JSC (luxury home developer) raised US$0.9b each as pre-IPO funding from sovereign wealth fund (SWF) and
leading PE. Vietnam and Indonesia are seeing increasing deal traction with sizeable investments from SWF and bulge
bracket PE, including Government of Singapore Investment Corporation, Warburg Pincus LLC, Kohlberg Kravis Roberts
& Co. Inc. and Texas Pacific Group Capital, among others.

Markets across SEA have witnessed a decline in fundraising in 2018. Interestingly, there was disparity in fundraising
performance, as funds with strong track record and size were able to exceed their fundraising goals, while newer funds
found it harder to raise capital.

Current trends and a peek into 2019
In the year ahead, we will likely be seeing:
► Tech companies continue to gain significant traction: Strong investor interest in the region's developing
    technology sector and other consumption-based industries is likely to help sustain higher levels of investment. PE
    investors will be particularly interested in SEA’s FinTech players with payments platforms and digital wallets, and
    health tech players with medical diagnostics capabilities.

► Maturing investor landscape leading to stiff competition and increased valuation: The growing amount of dry
  powder, coupled with the greater demand for capital from later stage companies has resulted in the surge of large
  cap consortium deals. Valuation for PE transactions are at close to its peak and there is an increasing valuation
  mismatch. EY Global Corporate Divestment Study 2019 indicates that 70% of SEA vendors believe that the valuation
  gap is more than 20%.

Note: PE and VC includes private equities, venture capitals and sovereign wealth funds (SWFs).
1. Deal value was undisclosed for 22 of the 69 announced PE transactions and 141 of the 311 announced VC transactions in 2018.
2. Deal value was undisclosed for 20 of the 90 announced PE transactions and 74 of the 230 announced VC transactions in 2017        Private equity briefing: SEA   4
3. Exit value was undisclosed for four of the 41 announced PE transactions and six of the 32 announced VC transactions in 2017.
4. Exit value was undisclosed for nine of the 13 announced PE transactions and five of the six announced VC transactions in 2018.
Note: Our analysis in this newsletter are based solely on PE and VC deals that are reported.
Private equity briefing: Southeast Asia - May 2019 - EY
► Start-ups gaining stability in the region: Start-up and early-stage funding decreased in 2018 in contrast to
   the rising expansion and growth capital funding. This indicates confidence of PE and VC firms in existing
   start-ups.

 ► Strengthening regulations increasing investor confidence: The focus on stringent anti-corruption laws
   among SEA corporates has led to an increase in investor confidence in the region. Malaysia has passed the
   Anti-Corruption Commission (Amendment) Act 2018, while Vietnam, Thailand and Singapore are enhancing
   efforts to curb private sector bribery and promote integrity, transparency and compliance.

 ► Opportunity for PE firms as corporate divestments expected to see a rise: More than ever, divestments
   are at the core of companies’ growth and transformation strategies. The EY Global Corporate Divestment
   Study 2019 found that 85% of SEA corporates plan to divest in the next two years. This continues to reflect a
   significant increase since 2018 from low previous averages – SEA divestment intentions were just at 26% in
   2017.

 ► Increased focus on active value creation: The focus on active value creation in the portfolio has never been
   higher. We see PE funds increasingly ramp up their value creation efforts through various operating models.
   In addition to topics such as revenue management, cost management, supply chain, and working capital. We
   are also seeing the emergence of digital as an active topic in value creation.

 Topics to be discussed in this issue

 In this issue, get insights on the fundamental changes that are at play in the diversified industrial sector in their
 bid to stay relevant in this changing landscape shaped by new technology and changing preferences. In the
 article, we will also share about how Industry 4.0, powered by a combination of big data, analytics and physical
 technology would potentially appear and the six big bets that will differentiate the leaders in the diversified
 industrial sector from their peers:

 ► Customer connectivity
 ► Supply chain reinvention
 ► Talent and culture
 ► Digital assimilation
 ► Big data and analytics
 ► Advances in enterprise
 We share our perspective on how the compliance landscape in SEA markets are affecting PE in the region.
 There is an increasing thrust on strengthening local legislation and guidelines to bring it on par with accepted
 international laws and conventions. We list out some of the key challenges that PE face in their pre and post-
 investment phases, as well as the best practices followed by PE around forensics and monitoring.

                 Luke Pais
                 EY Asean M&A and Private
                 Equity Leader and Partner,
                 Ernst & Young Corporate
                 Finance Pte Ltd.

“ We have almost come to the end of the second decade of private capital investing
  in the region. As the product has matured and is better understood, it has also
  taken various forms to address a variety of investor needs from early stage to
  growth stage to mature stage to structured solutions. The years ahead promise to
  be very exciting.”
                                                                                                    Private equity briefing: SEA   5
Private equity briefing: Southeast Asia - May 2019 - EY
2                   Investments

► PE and VC firms invested US$4.0b over 128 deals in                            ► Aggregate size of small- and mid-cap deals soared in
  4Q18 across the Southeast Asian region.                                         4Q18 as compared to 3Q18, increasing over 3.3
                                                                                  times.
► Deal activity in 4Q18 increased compared to the
  preceding quarter, i.e., 3Q18, both in terms of deal                          ► Second half of 2018 has witnessed significant uptick
  value and deal count, wherein PE and VC announced                               in VC deal activity with 199 deals in 2H18 vis-à-vis
  107 deals, investing US$3.1b in the region.                                     112 deals in 1H18.

Figure 1: PE investment activity
                  10,000                 30                                                                                              35
                                                        27                                                                               30
                   8,000
                                                                                                                             23
Deal value US$m

                                                                        20                                                               25

                                                                                                                                              Deal count
                   6,000                                                                                 17                              20
                                                                                      16
                                13                                                                               13
                   4,000                                                                                                                 15
                                                      7,762
                                                                      6,438                                                              10
                   2,000
                                                                                                       3,138               3,282         5
                               1,728   1,616                                         1,518                      976
                          0                                                                                                              0
                               1Q17    2Q17           3Q17            4Q17           1Q18              2Q18     3Q18       4Q18

                                                                    PE investment           Deal count

Figure 2: VC investment activity
                  3,000                                                                                                    105          120
                                                                                                                94
                  2,500                                                                                                                 100
                              2,632
Deal value US$m

                  2,000                                                                                                                 80
                                                                                                                                              Deal count

                                        62            62                                                       2,100
                               52                                     54                                56
                  1,500                                                              56                                                 60

                  1,000                                                                                                                 40

                   500                 752                                                                                 739          20
                                                                                                       647
                                                      314             357           1,710
                     0                                                                                                                  0
                              1Q17     2Q17          3Q17            4Q17           1Q18               2Q18    3Q18       4Q18

                                                                VC investment             Deal count

Note: Analysis based on announcement dates of the PE and VC deals
Source: AVCJ

                                                                                                                       Private equity briefing: SEA        6
Private equity briefing: Southeast Asia - May 2019 - EY
Table 1: Top PE and VC investments announced in 4Q18

Investment     Company                 Country          Sector          Value   Acquirer or investor
date                                                                   (US$m)

 Dec-2018      PT. Tokopedia            Indonesia       Information    1,100    Alibaba Group Holding Ltd.; Sequoia
                                                        technology              Capital India Advisors; SoftBank
                                                                                Investment Advisers (SB Investment
                                                                                Advisers); SOFTBANK Ventures Korea
 Dec-2018      Standard Chartered       Singapore       Other           995     Intermediate Capital Group Plc; Nainesh
               Private Equity -                                                 Jaisingh
               Portfolio

 Dec-2018      V3 Group Ltd.            Singapore       Consumer        364     KKR Singapore Pte. Ltd.
                                                        products and
                                                        services

 Oct-2018      Masan Group              Vietnam         Conglomerate    209     GIC Pte Ltd.; Undisclosed investor(s)
               Corporation

 Oct-2018      Voyager Innovations      Philippines     Information     175     Kohlberg Kravis Roberts & Co. L.P.
                                                        technology              (KKR); Tencent Holdings Ltd.

Source: AVCJ

                         Vikram Chakravarty
                         EY Asean Transaction
                         Advisory Services Leader and
                         Partner
                         Ernst & Young Solutions LLP

  “Given the global headwinds and business uncertainty, business owners will do well to
   partner with PE to diversify risk, manage growth, improve governance and beat
   competition. Therefore, we expect to see healthy investment activity in 2019.”

                                                                                               Private equity briefing: SEA   7
Private equity briefing: Southeast Asia - May 2019 - EY
Annual investment activity
                  ► In 2018, PE and VC recorded a total investment of US$14.1b from 380 announced deals across Southeast Asia.
                    The total deal count (announced) in the region increased in 2018 from 2017 (320 deals), however the total
                    investment value was lower than that in 2017 (US$21.6b) due to two mega deals (Equis Energy and Global Logistic
                    Properties Ltd. ) in that year. Excluding these two deals, the total investment in 2017 was US$11.1b.
                  ► Investments by PE in 2018 is estimated to be c.63% of total deal value, with remaining c.37% being from VC. In
                    terms of deal count, investments by PE in 2018 is estimated to be c.18% of total deal count (majority of the deal
                    counts are VCs).

                  Figure 3a: PE investment activity by deal cap                                                                         Figure 3b: VC investment activity by deal cap

                                    25,000                  90                                100                                                            6,000                                                350
                                                                                                                                                                                                 311
                                                                                              90
                                                                                                                                                             5,000                                                300
                                    20,000                                                    80
                                                                              69
                                                                                                                                                                                  230                             250
                                                                                              70
                                                                                                                                                             4,000
                                    15,000                                                    60                                                                                                3,180
                  Deal value US$m

                                                                                                                                           Deal value US$m
                                                                                                                 Deal count

                                                                                                                                                                                                                                     Deal count
                                                                                                                                                                                                                  200
                                                                                              50                                                             3,000
                                                          12,550                                                                                                                                                  150
                                    10,000                                                    40                                                                              3,050
                                                                                                                                                             2,000
                                                                                              30                                                                                                                  100
                                                                          5,179
                                     5,000                                                    20                                                                                                1,488
                                                                                                                                                             1,000                                                50
                                                           4,786                              10                                                                                  514
                                                                          3,670
                                                                                                                                                                                  491            529
                                           0                                                  0                                                                     0                                             0
                                                           2017           2018                                                                                                  2017            2018
                                         Small cap           Mid cap   Large cap         Deal count                                                               Small cap        Mid cap   Large cap        Deal count

                  ► Singapore maintained its lead in 2018 and accounted for the majority of the deal value (US$6.7b), followed by
                    Indonesia (US$3.3b) and Vietnam (US$3.1b).
                  ► In terms of deal count, Singapore leads again with the completion of 180 deals, followed by Indonesia (80),
                    Vietnam (38) and Malaysia (38).

                  Figure 4a: PE investment activity by country                                                                            Figure 4b: VC investment activity by country

                  25,000                             90                                   100                                                   6,000                                                         350
                                                                                                                                                                                              311
                                                                                          90
                                                                                                                                                5,000                                                         300
                  20,000                                                                  80
                                                                         69
                                                                 178                                                                                                      230                                 250
                                                     813                                  70
Deal value US$m

                                                                                                                              Deal value US$m

                                                                                                                                                4,000
                  15,000                                                                  60                                                                                                  3,003           200
                                                                                                    Deal count

                                                                                                                                                                                                                        Deal count

                                                                                          50                                                    3,000
                                                                                                                                                                                                              150
                  10,000                         12,924                                   40
                                                                                   10                                                           2,000                     3,706
                                                                        2,911             30                                                                                                                  100
                         5,000                                                            20
                                                                        3,737      276                                                          1,000                                         1,782           50
                                                 1,657                                    10
                                                  747                              465
                                                 1,200                  1,512
                                    0                                                     0                                                                  0                                                0
                                                 2017                   2018                                                                                              2017                2018

                                        Cambodia                          Indonesia                                                                              Brunei                         Cambodia
                                        Laos                              Malaysia                                                                               Indonesia                      Malaysia
                                        Myanmar (Burma)                   Philippines                                                                            Myanmar (Burma)                Philippines
                                        Singapore                         Thailand                                                                               Singapore                      Thailand
                                        Vietnam                           Deal count                                                                             Vietnam                        Deal count

                   Note: Analysis based on announcement dates of the PE/VC deals; Small = deal value less than US$20m, mid = deal value of US$20m-500m, large = deal value more
                   than US$500m; based on deal values disclosed
                   Source: AVCJ                                                                                                                      Private equity briefing: SEA                                                                 8
Private equity briefing: Southeast Asia - May 2019 - EY
Annual investment activity (cont’d)
► The Information Technology (IT) sector has been a major segment driving PE and VC deal activity in the region.
  Total deal value for tech companies went up by c.23% in 2018, while deal count increased by c.16%. The IT sector
  will continue to be a strong driver of deal activity as more companies and business models of scale emerge.
  Headline deals in this sector for 2018 include unicorns like PT Go-Jek’s US$1.5b, PT. Tokopedia’s US$1.1b and
  Grab’s US$1.0b fund raised.
► Computer-related, medical and electronics sector experienced an increase in VC deal activity. Notable computer-
  related deals include Goldman Sachs and TPG Capital’s debt funding of Airtrunk (US$618m) and Boyu Capital’s
  investment of US$125m in Trax retail.
► A majority of deal activity in the consumer sector is concentrated in Indonesia, Thailand and Malaysia. Investor
  appetite for consumer sector targets remained high amid the growing middle class in the region, however, there is
  tough competition for quality assets from both financial and strategic investors.

Figure 5a: PE deal count by sector                                                        Figure 5b: VC deal count by sector
                                       90                        69                                                            230                        311
              100%                                                                                100%
                    90%                                                                                                      9.6%                       12.9%
                                                              29.0%                                     90%
                    80%             41.1%                                                                                    6.1%                        3.9%
                                                                                                        80%                                              5.5%
                    70%                                                                                                     14.3%
                                                               7.2%
                                                                                                        70%                                             19.0%
 Deal count

                    60%                                        7.2%
                                    10.0%                     10.1%
                                                                                   Deal count
                                                                                                        60%
                    50%
                    40%              7.8%                     10.1%                                     50%

                    30%             12.2%                                                               40%
                                                              14.5%
                                                                                                                            68.7%
                    20%             13.3%                                                               30%                                             58.8%
                    10%                                       21.7%                                     20%
                                    13.3%
                     0%                                                                                 10%
                                     2017                     2018
                                                                                                             0%
              Information technology               Medical                                                                   2017                       2018
              Consumer products/services           Financial services
                                                                                                         Information technology               Computer related
              Electronics                          Services
                                                                                                         Services - Non-Financial             Medical
              Others                                                                                     Others

Figure 6a: PE deal value by sector                                                        Figure 6b: VC deal value by sector

                                   US$17.5b                   US$8.9b                                                         US$4.0b                     US$5.2b

                    100%                                                                                     100%
                                      14.4%                                                                                    8.3%                         8.8%
                     90%
                                                                                                              90%              4.7%                         4.9%
                     80%                                        39.4%
                                                                                                              80%                                          12.7%
                     70%
                                      36.6%
                     60%                                                                                      70%
                                                                2.7%
       Deal value

                     50%                                        10.9%                                         60%
                                                                                                Deal value

                     40%                                        13.6%                                         50%
                     30%              34.7%                                                                                    87.1%
                                                                15.7%                                         40%
                     20%                                                                                                                                   73.6%
                                                                                                              30%
                     10%               5.9%                     17.8%
                                       4.1%
                      0%                                                                                      20%
                                      2017                      2018
                                                                                                              10%

                    Financial services              Information technology                                    0%
                    Medical                         Consumer products/services                                                 2017                        2018
                    Transportation/ Distribution    Utilities
                    Others                                                                                          Information technology   Manufacturing - Heavy
                                                                                                                    Computer related         Others

Note: Analysis based on announcement dates of the PE/VC deals; based on deal values disclosed
Source: AVCJ
                                                                                                                                                   Private equity briefing: SEA   9
Private equity briefing: Southeast Asia - May 2019 - EY
Annual investment activity (cont’d)
Table 2: Top investments in 2018 – announced deals

 Investment
               Company                 Country     Sector                  Value (US$m)   Acquirer or investor
 date

  Jan-2018     PT Go-Jek Indonesia     Indonesia   Information                 1,535      Allianz X GmbH; Alphabet Inc. (Google);
               (GoJek)                             technology                             Beijing Shunwei Venture Capital Co., Ltd.
                                                                                          (Shunwei Capital); BlackRock, Inc.; GIC
                                                                                          Special Investments Pte Ltd.; Hera Capital
                                                                                          Partners Pte Ltd.; JD.com, Inc.; KKR
                                                                                          Singapore Pte. Ltd.; Meituan-Dianping
                                                                                          (Meituan.com); Northstar Group; PT Astra
                                                                                          International Tbk; PT Global Digital Prima
                                                                                          Ventures (GDP Ventures); Samsung
                                                                                          Venture Investment Corp.; Sequoia
                                                                                          Capital India Advisors; Temasek Holdings
                                                                                          (Private) Ltd.; Tencent Holdings Ltd.;
                                                                                          Warburg Pincus Singapore Pte Ltd.

  Dec-2018     PT. Tokopedia           Indonesia   Information                 1,100      Alibaba Group Holding Ltd.; Sequoia
                                                   technology                             Capital India Advisors; SoftBank
                                                                                          Investment Advisers (SB Investment
                                                                                          Advisers); SOFTBANK Ventures Korea

  Aug-2018     Grab Holdings Inc.      Singapore   Information                 1,000      All-Stars Investment Ltd.; Cinda Sino-Rock
                                                   technology                             Investment Management Co., Ltd.;
                                                                                          Lightspeed Venture Partners; Macquarie
                                                                                          Capital (USA) Inc.; Mirae Asset Daewoo
                                                                                          Co. Ltd.; OppenheimerFunds, Inc; Ping An
                                                                                          Capital Co., Ltd.; Vulcan Capital

  Dec-2018     Standard Chartered      Singapore   Other                       995        Intermediate Capital Group Plc; Nainesh
               Private Equity -                                                           Jaisingh
               Portfolio

  Apr-2018     Vietnam Technological   Vietnam     Financial services          922        Capital Group International Inc; Dragon
               & Commercial Joint                                                         Capital Group Ltd.; Fidelity Management &
               Stock Bank                                                                 Research Co.; GIC Pte Ltd.
               (Techcombank)

  Apr-2018     Vinhomes JSC            Vietnam     Construction                850        GIC Special Investments Pte Ltd.

 June-2018     DSM Sinochem            Singapore   Medical                     693        Bain Capital Asia, LLC
               Pharmaceuticals Pte
               Ltd.

  Sep-2018     MMI Holdings Ltd.       Singapore   Manufacturing - Heavy       645        Beijing HBH Innovation Industry Fund;
                                                                                          Cybernaut (China) Capital

  Aug-2018     AirTrunk                Singapore   Computer related            619        Goldman Sachs & Co. - Principal
                                                                                          Investment Area; TPG Sixth Street
                                                                                          Partners (TSSP)

  Mar-2018     Vietnam Technological   Vietnam     Financial services          370        Warburg Pincus Singapore Pte Ltd.
               & Commercial Joint
               Stock Bank
               (Techcombank)

Source: AVCJ

                                                                                                         Private equity briefing: SEA   10
3                 Exits

► There remains limited disclosure around PE exits in the                           ► The largest exit in 4Q18 was the sale of Standard
  region, with a number of deals going unreported and                                 Chartered Private Equity portfolio for US$995m.
  therefore not captured by the analysis.
► 4Q18 saw total exit value of US$1.34b through six
  disclosed exits. The total exit value for 4Q18 declined
  due to absence of large-cap exits and low deal count.

Figure 7: PE exit activity
                    12,000                               13                                                                                             14
                                 11                                                                                                                     12
                    10,000                                                10              10
  Deal value US$m

                                                                                                            8               8                           10
                     8,000

                                                                                                                                                                Deal count
                                         7                                                                                                              8
                     6,000                                                                                                                   6
                                                       11,246
                                                                                                                                                        6
                     4,000                                              7,940
                                                                                                                                                        4
                     2,000                                                                                                                              2
                                                                                         2,254            1,258           2,404
                                 777    755                                                                                                1,342
                            0                                                                                                                           0
                                1Q17   2Q17            3Q17             4Q17             1Q18            2Q18             3Q18            4Q18

                                                                  PE exit value            Deal count

Figure 8: VC exit activity
                    1,200                                                                                                                                   7
                                                                          6
                    1,000              1,113                                                                                                                6
  Deal value US$m

                                                                                                                                                            5
                     800
                                                                                                                                                                Deal count

                                                                                                                                                            4
                     600                3
                                                                                                                                                            3
                                 2                       2                                 2                                 2
                     400
                                                                                                                                                            2
                                                                                                            1                                 1
                                                        500
                     200                                                                                                                                    1
                                 80                                                                         50
                       0                                                                                                                                    0
                                1Q17   2Q17            3Q17             4Q17             1Q18             2Q18             3Q18             4Q18

                                                                  VC exit value            Deal count

Note: Analysis based on announcement dates of the PE/VC exit deals; based on deal values disclosed; Deals in which PE and VC both were involved are considered
as PE deals for the purpose of the analysis
Source: AVCJ                                                                                                                          Private equity briefing: SEA           11
Table 4: Top exits in 4Q18

Investment     Company                Country        Sector          Value   Sponsor                          Type
date                                                                (US$m)
Dec-2018       Standard Chartered     Singapore      Other           995     Standard Chartered Private       Trade sale
               Private Equity -                                              Equity
               Portfolio

Oct-2018       Masan Group            Vietnam        Conglomerate    209     Kohlberg Kravis Roberts & Co.    Trade sale
               Corporation                                                   (KKR)

Nov-2018       EZbuy Holdings Ltd.    Singapore      Information     86      China Growth Capital; EZbuy      Trade sale
                                                     technology              Holdings Ltd.; IDG Ventures;
                                                                             Sky9 Capital; Ventech; Vision
                                                                             Knight Capital Partners

Oct-2018       Tranglo Sdn. Bhd.      Malaysia       Information     28      Ekuinas                          Trade sale
                                                     technology

Nov-2018       SM Asset Holdings      Myanmar        Information     26      Samena Capital                   Trade sale
                                      (Burma)        technology

Source: AVCJ

                     Geophin George
                     Partner
                     Transaction Advisory Services
                     Ernst & Young Solutions LLP

“ There is a strong exit pipeline over the next two years and given the levels of dry
  powder, we expect to see more PE secondary transactions.”

                                                                                                      Private equity briefing: SEA   12
Annual exit activity
► PE and VC exit counts decreased from 54 in 2017 to 38 in 2018. The total exit value recorded in 2018 was
  US$7.3b across Southeast Asia, a steep decline from US$22.4b in 2017. Large-cap exits in 2018 include the sale of
  PT Agincourt Resources (exited by EMR Capital and Farallon Capital), sale of PT Bank Danamon Indonesia Tbk
  (exited by Temasek Holdings), share buyback of Interpharma Investments Ltd., and sale of MMI Holdings Ltd. (exited
  by KKR).
► In terms of exit count in 2018, Singapore leads with 12 announced exits, followed by Vietnam with 10 exits and
  Malaysia with seven exits. Singapore and Indonesia lead in terms of exit value due to the large-cap exits.

Figure 9a: PE exit activity by deal cap                                                                  Figure 9b: VC exit activity by deal cap

                    25,000              41                                         45                                             2,000              13                                       14

                                                                                   40                                             1,800
                                                                                                                                                                                              12
                    20,000                                      32                 35                                             1,600            180
                                       2,888
                                                                                                                                  1,400                                                       10
                                                                                   30
  Deal value US$m

                                                                                                                Deal value US$m
                    15,000                                                                                                        1,200
                                                                                   25                                                                                                         8
                                                                                         Deal count

                                                                                                                                                                                                    Deal count
                                                                                                                                  1,000                                     6
                                                                                   20                                                                                                         6
                    10,000                                                                                                         800
                                      17,800                                                                                                      1,500
                                                                                   15
                                                                                                                                   600                                                        4
                                                               1,662
                     5,000                                                         10                                              400
                                                                                                                                                                                              2
                                                               5,551               5                                               200
                                                                                                                                                                            50
                        0                                                          0                                                  0                                                       0
                                       2017                    2018                                                                                2017                    2018

                       Large cap         Mid cap       Small cap            Deal count                                              Large cap        Mid cap        Small cap          Deal count

Table 5: Top exits in 2018 – announced deals
Investment                                                                                             Value
                             Company               Country         Sector                                                         Vendor                                        Type
date                                                                                                  (US$m)
 Aug-2018                    PT Agincourt       Indonesia       Mining and                            1,210                       EMR Capital; Farallon Capital; Private        Trade sale
                             Resources (Martabe                 metals                                                            Investor(s)
                             Gold and Silver
                             Mine)
 Mar-2018                    PT Bank Danamon       Indonesia    Financial                             1,171                       Temasek Holdings                              Trade sale
                             Indonesia Tbk                      services

  Apr-2018                   Interpharma           Singapore    Medical                               1,000.0                     Temasek Holdings                              Share buyback
                             Investments Ltd.
                             (Zuellig Pharma)
 Dec-2018                    Standard Chartered    Singapore    Other                                 994.5                       Standard Chartered Private Equity             Trade sale
                             Private Equity -
                             Portfolio
 Sep-2018                    MMI Holdings Ltd.     Singapore    Manufacturing -                       645.0                       Kohlberg Kravis Roberts & Co. (KKR)           Trade sale
                                                                Heavy
 Sep-2018                    DSG International     Thailand     Manufacturing -                       530.0                       DSG International Ltd.; Morgan Stanley        Trade sale
                             (Thailand) PCL                     Light                                                             Private Equity

 Jan-2018                    Aspion Group          Malaysia     Manufacturing -                       342.7                       Low Chin Guan; Southern Capital               Trade sale
                                                                Light

Note: Analysis based on announcement dates of the PE/VC exit deals; Small = deal value less than US$20m, mid = deal value of US$20m-500m, large = deal value
more than US$500m; based on deal values disclosed; Deals in which PE and VC both were involved are considered as PE deals for the purpose of the analysis
Source: AVCJ                                                                                                                          Private equity briefing: SEA                                          13
4                 Fundraising

► According to Preqin, the total PE and VC dry powder                                    ► Surging investments in Southeast Asia resulted in
  for Asia-Pacific has reached a record level high of                                      increased competition and higher valuations. Thereby,
  c. US$368.4b at end of 2018.                                                             requiring PE and VC investors to increase their focus
                                                                                           on value creation and organic growth.
► Total funds raised for 2018 amounted to US$4.5b
  from a total fund count of 34, a decline of 72% from                                   ► Funds that improve their commercial excellence and
  US$16.0b in 2017.                                                                        harness digital technologies, along with securing top
                                                                                           talent, will be better positioned to produce anticipated
► PE funds accounted for 71.5% of total funds raised in
                                                                                           returns.
  2018. However, PE fund raising declined from
  US$13.8b in 2017 to US$3.2b in 2018.
► VC funds accounted for 28.5% of the total funds
  raised in 2018. VC funding also declined in 2018 from
  US$2.2b in 2017 to US$1.3b in 2018.

Figure 10: Fund raising activity* – Asia-Pacific domiciled funds with Southeast Asia focus

                    8,000                                                                                                                                      16
                                                          14
                    7,000                                                                                                                          13          14
                                                                           699
                    6,000                                                                                                                                      12
                             10
 Fund raised US$m

                    5,000                9                                                                                                                     10
                                                        1,237
                                                                                                                                                                    Fund count

                                                                                                                                 8
                    4,000                                                   7                 7                                                                8
                                                                                                                6
                    3,000                                                6,000                                                                                 6

                    2,000                               4,089                                                                                                  4
                            3,241
                    1,000                                                                                                                       2,355          2
                                                                                                              344
                                       479                                                  404               610               389
                       0                                                                                                                                       0
                            1Q17       2Q17              3Q17             4Q17              1Q18              2Q18              3Q18             4Q18

                                                     PE investment               VC investment                Deal count

Note: *Analysis includes all fund types i.e., growth, early stage or venture, real estate, infrastructure, mezzanine, special situations, etc. It includes funds that are
based out in Asia-Pacific and have a mandate to invest in Southeast Asia along with other geographic regions.                                    Private equity briefing: SEA    14
Source: Preqin
► We are currently witnessing a record level of dry powder in Asia. The two largest funds raised in 2018 with
  Southeast Asia as a region of focus include Dymon Asia Private Equity, which raised US$0.5b, and North Haven
  Thai, which raised US$0.4b.
► In addition to pure play PE, there is an increasing prevalence of shadow capital as institutional investors, sovereign
  wealth funds and family offices begin to deploy capital directly. Corporate acquirers continue to compete for quality
  assets, thereby increasing the need for PE firms to articulate a differentiated source of value-add above and beyond
  their ability to invest capital.

Table 6a: Top funds raised in 2018 – with Southeast Asia region among the location focus for investment

 Fund name             Closed    Manager             Type          Final size     Location focus                        Industry focus
                       date                                        (US$b)

                                                                                  Southeast Asia, Australia,
                                 Axiom Asia          Fund of
 Axiom Asia V          Dec-18                                      1.4            Emerging Markets, Greater China,       Diversified
                                 Private Capital     funds
                                                                                  India, Japan, South Korea

 Dymon Asia
                                 Dymon Asia
 Private Equity        May-18                        Balanced      0.5            Southeast Asia, Singapore              Diversified
                                 Private Equity
 (S.E. Asia) Fund II

                                 Morgan Stanley
 North Haven Thai
                       Oct-18    Private Equity      Buyout        0.4            Thailand                               Diversified
 Private Equity
                                 Asia

                                                                                                                         Technology, IT,
                                                                                                                         Biotechnology,
                                 Korea
 KIP NPS Re-up                                       Expansion/                   Southeast Asia, Europe, Far East,      Software,
                       May-18    Investment                        0.3
 Fund                                                late stage                   South Korea, US                        Semiconductors,
                                 Partners
                                                                                                                         Biomedical,
                                                                                                                         Diversified

                                                                                                                         IT, Business
 Capital Square                  Capital Square                                                                          Services,
                       Oct-18                        Buyout        0.2            Southeast Asia, India, Singapore
 Partners Fund I                 Partners                                                                                Outsourcing, IT
                                                                                                                         Infrastructure

Table 6b: Top funds raised in 2018 – with Asia as the key focus for investment
 Fund name              Closed   Manager             Type            Final size   Location focus                        Industry focus
                         date                                         (US$b)

 Hillhouse Fund IV      Sep-18   Hillhouse Capital   Buyout              10.6     Asia (incl. China) and Global          Technology,
                                 Management                                                                              Healthcare,
                                                                                                                         Consumer
                                                                                                                         Products

 Blackstone Real        Mar-18   Blackstone          Real Estate         7.1      Asia and Australia                     Property
 Estate Partners                 Group
 Asia II

 Carlyle Asia           Jun-18   Carlyle Group       Buyout              6.6      Asia                                   Telecoms,
 Partners V                                                                                                              Consumer
                                                                                                                         Products,
                                                                                                                         Manufacturing,
                                                                                                                         Media, Financial
                                                                                                                         Services

 PAG Asia Capital       Nov-18   PAG Asia Capital    Buyout              6.0      Asia (incl. India)                     Consumer
 Fund III                                                                                                                Products, Financial
                                                                                                                         Services,
                                                                                                                         Education,
                                                                                                                         Business Services

 Bain Capital Asia      Dec-18   Bain Capital        Buyout              4.7      Asia                                   Diversified
 IV

Source: Preqin

                                                                                                                  Private equity briefing: SEA   15
5
                                    Diversified
                                    Industrial
                                    Products

Diversified Industrial Products (DIP) sector overview
► The DIP sector includes companies in aerospace and defense, chemicals, industrial conglomerates, industrial and
  mechanical components, machinery and electrical systems and packaging, and paper and wood manufacturing.
► DIP companies are undergoing fundamental changes as they adapt to the altered landscape shaped by new
  technology and changing preferences. Though each subsector faces its own unique challenges and opportunities,
  they are united in their focus on three key fronts — growth, operational efficiencies, and technological innovation.

Figure 11: Global industrial revenue growth CAGR, 2011-14 versus 2014-18F

             2011-2014                  2014-2018F                                                                +1.6%
                                                                                        +4.8%
                                     -0.7%                                                  6.3%                       6.6%
                                                                   +4.2%
     +4.8%                                            +2.8%             4.9%                                 5.0%
            4.3%              4.1%
                                       3.4%              3.6%

                                                                                     1.5%
                                                 0.8%            0.7%

 (0.5%)
    Industrials                   Financials         Consumer   Communications       Information              Health care
                                                      staples                         technology

Source: Capital IQ; EY Analysis

                                                                                                   Private equity briefing: SEA   16
Diversified Industrial Products (DIP) sector overview (cont’d)
► As technology innovation drives new business possibilities, DIP firms are finding themselves in a market with new
  customer expectations and product capabilities, including new competitors that bring differentiated business
  models to long established ways of working.
► DIP companies are refocusing their businesses on core operations, moving away from the mindset of “diversification
  as a virtue” and are divesting operations that were underperforming or diluting corporate resources. As such, we
  are seeing an increase in industrial revenue growth (figure 11). Leaders are now turning their attention towards
  positioning themselves to survive market disruption and to increase their digital capabilities.
► The EY Industrial Products Balancing Act survey revealed that investing in the following six big bets is what
  differentiates the leaders from its peers. The survey covered 500 companies and their C-suite leaders across six
  industries (chemicals and base materials, machinery and electrical systems, industrial and mechanical components,
  packaging, paper and wood and aerospace and defence).

 Six bets for DIP players

1                                                            4
           Customer connectivity                                       Digital assimilation
           • Faced with empowered customers who are                    • There has been explosive growth of new
             more demanding coupled with changing                        technologies such as big data, analytics,
             business models (use of seamlessly                          artificial intelligence, and the Internet of
             connected products), companies in                           Things. Companies that embrace digital
             manufacturing need to seek new ways to                      early on have witnessed improved
             connect with their end consumers.                           productivity and customer satisfaction.
           • E.g., an industrial conglomerate generates                • E.g., an European DIP conglomerate
             additional revenues from third-party app                    acquired a smart building IoT systems
             developers that offer services over their                   provider that enhances building
             digital platforms.                                          performance by gathering multiple streams
                                                                         of data, thus improving transparency and
                                                                         lowering energy usage.

2                                                            5
           Supply chain reinvention                                    Big data and analytics
           • The supply chain must be positioned to meet               • Amid challenges such as a lack of analytics
             the needs of today’s digitally savvy                        awareness among suppliers, limited abilities,
             consumer, integrating a complex ecosystem                   resources and talents such as data
             of suppliers and customers to deliver on                    scientists, companies need to examine how
             increasing cost and cash saving demands                     they can reap the full benefits of big data
             while still running efficiently.                            and analytics.

           • E.g., an aviation company uses 3D-printed                 • E.g. a DIP conglomerate leveraged machine
             fuel nozzles for one of its engines. Reducing               learning to derive meaningful insights from
             the number of parts required to make the                    large volumes of unclean procurement data,
             nozzle from 20 to one leads to a much                       saving US$300m of procurement costs
             shorter supply chain.                                       annually.

3                                                            6
           Talent and culture                                          Advances in enterprise
           • Against competition from technology                       • With a risk universe that is rapidly changing
             companies in attracting talent, DIP                         in the form of disruptions, digitization of
             companies need to focus on creating a                       business and loss of sensitive data from
             supportive culture as well as training and                  cyber attacks, DIP companies should be
             upskilling workers.                                         efficiently equipped to ensure business
                                                                         continuity.
           • E.g., an aerospace manufacturer invested
             US$100m for a new workforce development                   • E.g., an aerospace manufacturer launched a
             program to enhance employees’ digital                       portfolio of digital solutions along with a
             literacy through online courses and degree                  new customizable self-service portal to
             programs.                                                   maximize the operational efficiencies of its
                                                                         aerospace aftermarket business.

                                                                                                  Private equity briefing: SEA   17
Portfolio transformation helps industrial companies ride the wave of market
disruption and remain competitive
About 75% of executives believed that portfolio                 business strategy in times of rapid-speed technology
transformation is the leading priority on the                   advancements need to understand the value of their
boardroom agenda. Over the last three years, 29% of             own technology to their business. As well, sellers can
industrial companies have increased the frequency of            achieve strong valuations for their business not only
their portfolio reviews. Of which, one-third have               from strong operating models and legal structures, but
increased the frequency of reviews, citing threats from         also from clear communication about the potential
digitally-enabled competitors and startups as the               impact of technology. Revealingly, 19% of DIP
reason.                                                         executives did not communicate the impact of
                                                                technology on the future state of the business, and
A key aspect of transformation is related to                    believed that their sale price would have had benefitted
technology; 40% of DIP companies say they recently              from doing so.
divested to raise funds for technology investment.
Going forward, 72% of companies believe that                    61% of executives citing the need to fund new
technology-driven divestments will increase in the next         technology investments as increasing their impetus to
12 months.                                                      divest over the coming year. While this makes sense,
                                                                companies should evaluate divestments not only on the
Clearly, such technology-driven divestments and                 cash that can be generated to support new technology,
capital decisions must be taken and executed                    but also the impact on the overall portfolio as the
judiciously.                                                    organization builds out its digital capabilities and
                                                                positions itself to pursue new markets.
For a start, these companies that are redefining their

Figure 12: Most important factors for board members             Figure 13: List of technologies companies plan to
                                                                use ahead of their next divestment

Portfolio transformation (buying and selling assets to          Reporting and analytics
reshape future portfolio)
                                                                                                                                 88%

                                                          73%   Cloud computing

Impact of increased economic and political                                                                                80%
uncertainty
                                                                Cybersecurity software

                                   41%                                                                                 76%

Shareholder activism, including returning cash to               Enterprise Resource Planning (ERP) software
shareholders
                                                                                                                 68%
                               36%                              Software as a Service

                                                                                                           62%
Increasing regulatory or governmental intervention
                                                                Robotics process automation
                         29%                                                                    47%

Impact of digital technology and transformation to              Machine learning
business model or threat of digital enabled competitors
                                                                                          30%
                18%                                             IT infrastructure

                                                                                 21%

                                                                Artificial intelligence

                                                                       9%

                                                                                                        Private equity briefing: SEA   18
The rise of digital factories, which
                                   Sensors                                 characterizes manufacturing in Industry
                                    and big                                4.0, is powered by a combination of big
                                     data                                  data, analytics and physical technology.
                                   analytics
                                                                           Manufacturers will need to transform their
                                                                           business models. However, coordinating
                                                         Cloud
                                                                           the end-to-end digital transformation
      Blockchain                                       computing           across entire value chains that are often
                                                         (IoT)             scattered across the globe, is a challenge.

                           Industry                                        DIP companies are taking a more
                                                                           thoughtful and strategic approach to

       Advanced
                              4.0                                          planning deals. With both equity and M&A
                                                                           valuations at elevated levels, the pressure
        robotics,
                                                                           on buyers is increasing.
        artificial
      intelligence                                   Cybersecurity
                                                                           But executives are acutely aware that the
          and                                                              deals still have to make both strategic and
        machine                                                            financial sense, and are unwilling to
        learning                                                           overpay for assets. Sophisticated
                                   Additive
                                                                           methodologies to source potential targets
                                manufacturing
                                or 3D printing                             will support this growth, along with
                                                                           evolving due diligence techniques and
                                                                           analytics to assess planned acquisitions.

                                                                     Figure 14: Companies that failed to complete or
  DIP deals in Southeast Asia                                        cancelled a planned acquisition in the past 12 months
                                                                                                   74%
  •   One of Asia’s largest defense and engineering
      groups agreed to acquire a world-leading
      manufacturer of aircraft components in a deal
                                                                              26%
      that values the company at US$630m. This
      was in line with the Group’s intention to
      acquire companies in their core business areas
      of adjacencies, which will result in profitable                         No                   Yes
      revenue streams and a stronger competitive
      edge.
                                                                     Primary reason for failure
  •   A unit of a Singapore listed utilities, marine

                                                                     53%
      and urban development group has divested its
      Singapore medical waste division for S$20m.
      This is in line with the Group’s intention to
      divest peripheral utilities assets to recycle
      capital and unlock value.
                                                                     Competition from other buyers or price or valuation gap

                     Karambir Anand
                     Partner
                     Transaction Advisory Services
                     Ernst & Young Solutions LLP

“ DIP companies are taking a more thoughtful and strategic approach to planning
  deals. With both equity and M&A valuations at elevated levels, the pressure on
  buyers is increasing.”

                                                                                                      Private equity briefing: SEA   19
6
                          Risk and compliance
                          challenges in
                          emerging markets

Across various Southeast Asia (SEA) countries, a strengthening of local legislation
and guidelines to be at par with international laws and conventions is observed.
Singapore:                                                Indonesia:
► The government announced that it was enhancing          ► A Supreme Court Regulation in 2016 provided
  efforts to keep graft at bay, including reviewing the     guidelines for enforcement authorities around
  Prevention of Corruption Act and boosting manpower        handling of corporate crimes including corruption, and
  at the Corrupt Practice Investigation Bureau.             money laundering.
► Singapore, Malaysia and Indonesia adopted standards     Thailand:
  in line with ISO 37001:2016 Anti-bribery management
                                                          ► Amendment to the Organic Act on Counter Corruption
  systems, a leading voluntary industry standard that
                                                            for failure to prevent bribery. The Thai Criminal Code
  provides requirements and guidance to help
                                                            adds that active and passive bribery are banned.
  management establish a culture of integrity,
  transparency and compliance.                            Vietnam:
Malaysia:                                                 ► Introduction of a new Penal Code in 2018 to
                                                            criminalize private sector bribery. The country also
► The Anti-Corruption Commission (Amendment) Act
                                                            designed and implemented a cyber security law that
  2018 was passed in April 2018. The Act penalizes
                                                            tightens control over the internet and global
  commercial organizations for corrupt acts by
                                                            technology companies.
  associated persons. It also empowers the Malaysian
  Anti-Corruption Commission.

                                                                                             Private equity briefing: SEA   20
Emerging markets’ perception
Transparency International’s Corruption Perception Index (TI CPI), which is released annually, ranks 180 countries
and territories by their perceived levels of public sector corruption. The index uses a scale of 0 to 100, where 0 is
“highly corrupt” and 100 is “very clean”. TI’s most recent CPI continues to show that the majority of regions within
SEA are making little or no progress in ending corruption:

                                                                                                                    41
                                                                                                                   China

                                                                                                        35
                                                                                                       Vietnam
                                                                               40
                                                                               India
                                                                                                               37
                                                                                        37                   Indonesia

                                                                                       Thailand
                                                                             84
                                                                           Singapore               47
                                                                                                  Malaysia
                                                                                                                          CPI
                                                                                                                         scores

The EY Global Fraud Survey 2018 found that bribery and corrupt practices happen more widely in emerging markets
– 52%, compared to the global average of 38%. Similarly, respondents in emerging markets (16%) believe it is
common to use bribery in their sector (emerging markets 16% versus global 11%) and to justify cash payments to
win or retain business (emerging markets 19% versus global 13%).

 Insights from EY Global Fraud Survey 2018                                Global                  Emerging markets
 Bribery and corruption is widespread in business                          38%                               52%
 Cash payments justified to win or retain business                         13%                               19%
 Bribery is used commonly to win contracts                                 11%                               16%

                   Saket Bhartia
                   Associate Partner
                   Forensic & Integrity Services
                   Ernst & Young Advisory Pte. Ltd.

“ Given the increased focus on governance and compliance matters by limited
  partners, risk and compliance is becoming an even more important element in the
  due diligence process. There is also a strong focus on corrective actions following
  the investment.”

                                                                                                        Private equity briefing: SEA   21
Challenges faced by PEs
Some of the recent challenges that PE firms face when monitoring portfolio companies in emerging markets include:
►   Not being directly involved in the operations of the company
►   Poor governance and lack of transparency
►   Limited due diligence on third parties and other integrity risks
►   Bureaucratic complexities
►   Regulatory pressures (e.g., due to past enforcement actions against the entity)
►   Difficulty in keeping abreast with the emerging fraud scenarios or risks in various industries

These challenges expose PEs to the following key fraud, bribery, corruption and other risks generally observed in the
region as part of pre- and post-investment decisions:

                      Pre-investment                                                     Post-investment

            Financial misstatement risk                                     End use of funds

    ►   Overstatement or advancement of sales, and                ►    Siphoning of funds through related-party
        real margins of business                                       transactions and not at arm’s length prices
    ►   Superficial business modelling                            ►    Whether funds have been utilized per the
    ►   Overvaluation of assets and undervaluation                     business plan
        of liabilities                                            ►    Diversion of funds into unrelated businesses
    ►   Related parties and such transactions are                 ►    Cash sales, unaccounted business transactions
        not disclosed
    ►   Postponement of major cost items or delay in                         Financial misstatement risk
        regular payout to channel partners

            Bribery and corruption risk                          ►    Overstatement of expenses and unreasonable
                                                                      business transactions
    ►   Involvement in bribery and corruption to meet
        business goals                                                     Other risks
    ►   Irregular payments paid to officials and disclosed
        under incorrect heads                                    ►    Theft of intellectual property (IP)
    ►   Counterfeit and grey market products                     ►    Asset misappropriation
                                                                 ►    Violations against regulatory, taxation guidelines, or
            Other risks                                               compliance norms
                                                                 ►    Asset stripping and project cost inflation
    ►   Undisclosed non-compliances (e.g., food safety,          ►    Involvement in bribes and facilitation pay-outs for
        environmental issues)                                         business end
    ►   Undisclosed tax evasion, legal cases, demands and        ►    Significant deviations from loan covenants or agreed
        disputes with tax authorities                                 financial goals

Questions that PE should ask when investing in emerging markets:
► Promoters: can they be relied upon? What is their              ► Business practices: what are the business
  history or background? Are there any significant                 practices followed by the entity? How are the
  unknowns that can impact investment in the                       business practices and issues identified of the
  future?                                                          target compared to industry standard and the
                                                                   country environment?
► Management: what is the integrity and background
  of key management, especially those who will                   ► Customers and vendors: are they genuine?
  continue to work in the organization post-
                                                                 ► Bribery and corruption: what is the level of
  investment?
                                                                   tolerance when it comes to bribery and corruption?
► Financials: how accurate is the financial                        Can the business continue without such practices
  presentation? How can specific issues identified                 post-investment?
  during a financial due diligence be verified?

                                                                                                      Private equity briefing: SEA   22
Best practices followed by PEs when it comes to forensic due diligences
and monitoring
Pro-active forensic activities pre-investment:                   Forensic activities post-investment:
Before deciding to invest, PEs need to proactively analyze       Uncertainties related to valuations, working capital
a range of risks to minimize the potential loss of deal value.   adjustments and earn-outs, along with increased
These risks may include fraud, bribery and corruption            investments in emerging markets, expose transacting
including conflicts of interest, restrictions on trade and       parties to significant risks even after the deal is completed.
export, third-party integrity, reputation, and regulatory        PEs mitigate and resolve post-closing disputes and ease
investigations. Some of the key proactive steps that PE          the purchase integration process by conducting
firms can take include:                                          appropriate risk mitigation exercises. This can include:

Forensic due diligence                                           Investigation, compliance and dispute services

► Assessing the risks of fraud, bribery and corruption,          ► Assisting with the development of anti-fraud or ABAC
  money laundering, economic sanctions and conflicts               compliance programs
  of interest
                                                                 ► Conducting post-closing fraud risk assessments;
► Executing a detailed anti-bribery anti-corruption                advising on compliance risk programs and performing
  (ABAC) due-diligence on the business to ensure                   compliance monitoring
  compliance with regulators
► Performing fact-finding transaction testing on                 ► Leveraging FDA to perform enhanced due diligence
  selected high-risk transactions                                  with additional data from the acquired business,
► Deploying forensic data analytics (FDA) to identify            ► Monitoring the end-use of funds
  potential red flags                                            ► Proactive Electronic Stored Information (ESI) review
► Conducting integrity due diligence checks (e.g.,
  background checks on key management personnel,                 ► Conducting fraud investigations
  vendors and customers)                                         ► Serving as subject-matter expert or testifying expert
► Performing a cyber due diligence                                 on behalf of seller or buyer

                  Belinda Tan
                  Partner
                  Forensic & Integrity Services
                  Ernst & Young Advisory Pte. Ltd.

“ Understanding the areas to look at when conducting a due diligence exercise can
  help PE firms reduce the risk of post-acquisition surprises.”

                                                                                                    Private equity briefing: SEA   23
7                    Our PE service
                              offerings

The EY PE team comprises
experienced professionals focused
on PE and is supported by EY deep
sector and functional professionals
around the world.

 ►   Lead advisory                ►   Restructuring                                 ►   Performance            ►   Finance
 ►   Commercial advisory          ►   Real estate                                       improvement            ►   Human resources
 ►   Financial diligence          ►   Divestiture                                   ►   Sales force            ►   Supply chain
 ►   Operational diligence        ►   Valuation and                                     effectiveness          ►   IT transformation
 ►   IT diligence                     business modeling                             ►   Business               ►   Risk
 ►   Carve-out                    ►   Operational improvement                           intelligence
 ►   Integration

                                                             EY PE team

                                                                 Private
                                                                 equity
                                                                  fund

                                                          Our capabilities
     ►   Focus: provide value creation         ►   Broad functional knowledge:               ►   Accelerated approach: customized
         services across the PE investment         capabilities in PE fund structuring,          approach that is highly responsive
         life cycle                                portfolio audit, strategy, M&A and            and provides improved realization
     ►   Dedicated PE experience:                  all core operating functions;                 of benefits
         dedicated teams comprising former         experience in revenue                     ►   Global capabilities: dedicated
         PE operating partners, seasoned           enhancement, cost reduction,                  teams that has extensive cross-
         operating executives and                  human capital and                             border experience with access to
         management consultants                    change management.                            more than 30,000 consultants
                                               ►   Deep sector experience: primary               operating in 140 countries with
                                                   focus in oil and gas, consumer,               deep industry and functional know-
                                                   industrial, and health care; ability to       how
                                                   tap into sub-sector professionals

                                                                                                                Private equity briefing: SEA   24
EY contacts
Service line contacts                                          Country contacts
M&A                                                            Indonesia

Luke Pais                                                      David Rimbo                              Sahala Situmorang
luke.pais@sg.ey.com                                            david.rimbo@id.ey.com                    sahala.situmorang@id.ey.com
+65 6309 8094                                                  +62 21 5289 5025                         +62 21 5289 5210

Corporate Finance Strategy       Commercial Due Diligence      Hertanu Wahyudi
                                                               hertanu.wahyudi@id.ey.com
Karambir Anand                   Nicolas de Geeter             +62 21 5289 5684
karambir.anand@sg.ey.com         nicolas.de.geeter@sg.ey.com
+65 6309 8089                    +65 6309 8148                 Malaysia

Transaction Support              ESG                           George Koshy                             Preman Menon
                                                               george.koshy@my.ey.com                   preman.menon@my.ey.com
Seng Leong Teh                   Raymond Leong                 +60 3 7495 8700                          +60 3 7495 7811
seng-leong.teh@sg.ey.com         raymond.leong@sg.ey.com
+62 21 5289 5007                 +65 6309 6313                 Philippines

Transaction Tax                                                Ramon Dizon                              Marie Stephanie C Tan-Hamed
                                                               ramon.d.dizon@ph.ey.com                  marie.stephanie.c.tan-hamed@ph.ey.com
Darryl Kinneally                                               +63 2 894 8163                           +63 2 894 8338
darryl.kinneally@sg.ey.com
+65 6309 6800                                                  Singapore

Operational Due Diligence / Value Creation                     Purandar Rao                             Vikram Chakravarty
                                                               purandar.rao@sg.ey.com                   vikram.chakravarty@sg.ey.com
Sriram Changali                  Alan Huang                    +65 6309 6560                            +65 6309 8809
sriram.changali@sg.ey.com        alan.huang@sg.ey.com
+65 6309 8555                    +65 6309 8108                 Thailand

Valuation, Modeling & Economics Data Analytics                 Piyanuch Nitikasetrsoonthorn             Vorapoj Amnauypanit
                                                               piyanuch.nitikasetrsoonthorn@th.ey.com   vorapoj.amnauypanit@th.ey.com
Andre Toh                        Xavier Vitiello               +66 2 264 9090                           +66 2 264 9090
andre.toh@sg.ey.com              xavier.vitiello@sg.ey.com
+65 6309 6214                    +65 6309 8328                 Vietnam

                                                               Toan Quoc Nguyen                         Du Vinh Tran
                                                               toan.quoc.nguyen@vn.ey.com               du.vinh.tran@vn.ey.com
Sector contacts                                                +84 8 3824 5252                          +84 8 3824 5252

Consumer Products                TMT
                                                               Regional contacts
Geophin George                   Joongshik Wang
geophin.george@sg.ey.com         joongshik.wang@sg.ey.com      Asia-Pacific Markets & Deal
                                                                                                        Greater China PE Leader
+65 6309 8168                    +65 6309 8078                 Origination

Health care                      Financial Services            Amitava Guharoy                          Tony Tsang
                                                               amitava.guharoy@sg.ey.com                tony.tsang@cn.ey.com
Abhay Bangi /Keith Lostaglio     Stuart Last                   +65 6309 8001                            +86 21 2228 2358
abhay.bangi@sg.ey.com /
                                 stuart.last@sg.ey.com
keith.lostaglio@sg.ey.com                                      Oceania PE Leader                        Korea PE Leader
                                 +65 6309 6720
+65 6309 6151 / +65 6718 1999
                                                               Bryan Zekulich                           Yoon Hyung Chang
Oil & Gas                        Infrastructure                bryan.zekulich@au.ey.com                 yoonhyung.chang@kr.ey.com
                                                               +61 2 9248 5833                          +82 2 3787 6788
Sanjeev Gupta                    Lynn Tho
sanjeev-a.gupta@sg.ey.com        lynn.tho@sg.ey.com            Global contact
+65 6309 8688                    +65 6309 6688
                                                               Global
Real Estate                      Power & Utilities
                                                               Andres Saenz
Teh Seng Leong                   Gilles Pascual                andres.saenz@parthenon.ey.com
seng-leong.teh@sg.ey.com         gilles.pascual@sg.ey.com      +1 617 478 4619
+62 21 5289 5007                 +65 6309 6208

                                                                                                               Private equity briefing: SEA     25
EY | Assurance | Tax | Transactions | Advisory

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How EY’s Global PE Sector can help your business
PE firms, portfolio companies and investment
funds face complex challenges. They are under
pressure to deploy capital amid geopolitical
uncertainty, increased competition, higher
valuations and rising stakeholder expectations.
Successful deals depend on the ability to move
faster, drive rapid and strategic growth and create
greater value throughout the transaction lifecycle.
EY taps its global network to help source deal
opportunities and combines deep sector insights
with the proven, innovative strategies that have
guided the world’s fastest growing companies. Our
clients discover powerful new ways to create
unexpected paths to value ─ generating positive
economic benefits for both investors and society.
That’s the power of positive equity.
© 2019 EYGM Limited.
All Rights Reserved.
EYG no. 002350-19Gbl
ED None
This material has been prepared for general informational
purposes only and is not intended to be relied upon as accounting,
tax or other professional advice. Please refer to your advisors
for specific advice.

The views of third parties set out in this publication are not
necessarily the views of the global EY organization or its member
firms. Moreover, they should be seen in the context of the time
they were made.

ey.com

                                                                     Private equity briefing: SEA   26
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