Singapore, 23 March, 2015 – In 2014, the Asia Pacific Foreign Direct Investment inflows accounted for one-third of global FDI inflows, making the region a hotspot for cross-border investments. The positive investor sentiments in Asia Pacific were reflected in the global deals wherein Asia Pacific contributed around 20 to 25 percent of the overall deal volumes every year between 2010 and 2015.
Investments in ICT (Information & Communication Technologies), Energy and Healthcare sectors by venture capital, private equity as well as strategic investors (through M&A) outperformed the others during this period globally. Herein, ICT was the leader with in terms of deals volumes and value driven by investments in areas such as social media, big data, mobile applications and cloud computing, among others.
Globally, healthcare emerged as the second most important sector (due to the focus on biotechnology and healthcare equipment), while investments in APAC have focused on the materials sector, which included investments in diversified metals and mining. Furthermore, there was significant activity in energy and other manufacturing industries driven by investor interest in metals and minerals.
“With the increasing availability of market capital and investor opportunities across different sectors, it is likely that Asia Pacific will remain highly relevant for the global investor community. Key sectors for growth include the Internet-linked businesses, media, semi-conductors, Telecom, Media and Technologies (TMT), healthcare, restaurants, FMCG and real estate especially in the distressed asset spaces,” notes Sanjay Singh, Vice-President, Business & Financial Services, Frost & Sullivan Asia Pacific.
“The outlook for Indonesia is especially exciting for us, as a high growth investment landscape, with of course China being the leader in deal activity for the region,” he added. Globally, China was the most active region accounting for 32% of total deals in APAC. Around 95% of these deals were from domestic acquirers indicating a trend of industry consolidation within China.
Frost & Sullivan examined the various sub-segments within the key investment themes of ICT, Healthcare and Energy and looked at the growth rates and opportunities within each. The specific focus areas within each of the sectors are delineated below.
ICT
In 2014, there was a proliferation of investments in e-commerce, digital media and alternative payment solutions start-ups in technology space within APAC. From an investor perspective, Asia-based start-ups received a boost, with more than US$10 billion invested in Asian start-ups over the last 5 years. Two Asia-based start-ups (Flipkart and Xiaomi) raised more than US$1 billion in funding.
“We also expect the upcoming formation of ASEAN Economic Community to usher in more FDIs especially in infrastructure-related sector creating opportunities for regional start-ups,” noted Ajay Sunder, Vice-President, ICT, Frost & Sullivan Asia Pacific.
E-commerce, Digital advertising and Cloud based start-ups are expected to be the focus sectors for APAC investors.
Healthcare
Southeast Asia will also remain an area of focus in 2015, with varying degrees of growth in areas such as healthcare services, Healthcare IT/ E-health and Aged Care across Indonesia, Malaysia, Thailand, Singapore and Philippines. Out of these, Malaysia and Singapore will remain most attractive to investors, helped by a conducive business landscape and government support.
“To address the rising demand for healthcare services, as private hospital groups plan to expand through greenfield and brown field activities, they would be looking to partner with or outsource to agencies various operations such as hospital design, IT/infrastructure, facility management, training, advisory, lab-services, etc.” says Dr. Milind Sabnis, Director, Healthcare, Frost & Sullivan Asia Pacific.
Energy
The current low oil price climate is likely to stay for at least two years and this has thrown up some investment opportunities in the mid-stream of the value chain globally. The requirement for storage of oil will increase in the short term when companies take advantage of low oil prices.
“Since lower oil prices are also leading to lower gas prices, the infrastructure for LNG regasification and storage is likely to attract investment in Southeast Asia,” noted Ravi Krishnaswamy, Vice President, Energy & Environment, Frost & Sullivan Asia Pacific.
Frost & Sullivan GIL Briefings
Frost & Sullivan held its GIL Investor Briefing: INVESTMENT OPPORTUNITIES IN KEY INDUSTRIES, on 20 March, 2015 in Singapore. GIL briefings on various topics are held across Asia Pacific countries. If you are interested to attend any of the briefings, please send an email to melissa.tan@frost.com.
