SINGAPORE, Sept 30 (Reuters) - Buyout firms and asset
managers are moving in on billions of dollars of infrastructure
assets across Southeast Asia, lured by the sector's growth
prospects and stable, long-term returns, bankers and analysts
Merger and acquisition deal volume is up in the sector so
far this year, data shows, and a healthy pipeline of deals could
make Southeast Asia a rare bright spot for global funds as they
grapple with rising finance costs and slumping markets.
The industry is also flush with potentially available
assets, after a boom in infrastructure development fed by rapid
Telecom operators including PLDT in the Philippines
and Indonesian carriers, grappling with tight margins and
burdensome debt, have done sale and lease back transactions for
thousands of cell phone towers.
"Southeast Asia is a highly sought-after market given the
compelling growth outlook for infrastructure assets," said
Ee-Ching Tay, head of investment banking for Southeast Asia at
About 210 deals targeting Southeast Asia's industrial and
telecoms sector have been announced so far this year, exceeding
the 184 from the same period a year earlier, Refinitiv data
shows, in contrast with a 9% drop across all sectors in the
region, although deal value in the sector has declined.
Last year was a record for the sector, with some blockbuster
deals, and analysts say the near-term pipeline is strong.
Possibilities include the data centre business of
Malaysia's Time Dotcom Bhd, which has attracted bids
from DigitalBridge Group and U.S. data centre firm
Equinix and could be valued at about $600 million,
sources familiar with the matter said.
The sources declined to be named because the discussions
DigitalBridge declined comment, while Equinix and Time
Dotcom did not respond to requests for comment.
In another deal that could be worth up to $3 billion,
sources familiar with the matter told Reuters last week that
Canadian pension fund and buyout firms are among potential
suitors for a toll road business put up for sale by CVC Capital
Partners and its Hong Kong-listed partner with assets in
Indonesia and China.
"Infrastructure assets are generally underpinned by
long-term contracts, providing certainty of cashflows, which
allows them to attract debt at high gearing to improve returns
to investors," said Gilles Pascual, who leads EY's activities in
Southeast Asian power & utilities sectors.
The region, with its relatively resilient economic growth,
has attracted interest in contrast with other places facing
slowdowns and even recession as policymakers battle inflation.
Indonesia, the region's biggest economy, reported gross
domestic product growth of 5.4% in April-June from a year
earlier, the fastest in a year, while Vietnam grew 13.7% in the
third quarter, its fastest pace in decades.
In contrast, the IMF pegs Asia's overall economic growth at
4.2 percent this year.
"Favourable structural drivers such as local market reforms
and rising urbanisation and consumption" have also fostered
rapid growth in investment opportunities in recent years, said
Michael De Guzman, a managing director at KKR's infrastructure
Analysts warned, at the same time, that regulatory and other
risks remained, requiring investors to be discerning.
"Markets with the inability to offer a good pipeline of
projects or lack of regulatory and legislative clarity can
impede the ability to attract institutional capital," said
said Sharad Somani, KPMG's Asia Pacific head of infrastructure
There are still, however, plenty of signs that global funds
are committed to the sector.
KKR said last month it had raised more than $4 billion for
its latest Asia infrastructure fund, topping the $3.8 billion
raised for its inaugural Asia Pacific fund, which completed
fundraising in 2021 and had been the largest such fund in the
A number of big M&A deals have already been sealed in recent
months, including record transactions in the Philippines.
In April, Edotco, the wireless tower unit of Malaysia's
Axita, and EdgePoint Infrastructure agreed to buy
thousands of cell towers and related infrastructure from PLDT
for 77 billion Philippine pesos ($1.35 billion).
PLDT rival Globe Telecom last month clinched a
separate sale and leaseback deal for thousands of its towers
with KKR-backed Frontier Towers and U.S. alternative investment
firm Stonepeak's associated investment vehicles.
(Reporting by Anshuman Daga and Yantoultra Ngui; Editing by
Sumeet Chatterjee and Edmund Klamann)