Record High Asia Leveraged Buyouts in Q1 This Year... 340% Surge YoY to '56 Trillion Won'

[Asia Economy Reporter Park Byung-hee] Major foreign media reported on the 31st of last month (local time) that the scale of leveraged buyouts (LBOs) in the Asia region in the first quarter of this year reached an all-time high for a first quarter.

According to financial information firm Refinitiv, the scale of LBO transactions in the Asia region in the first quarter of this year surged 340% year-on-year to $46.5 billion (approximately 56.4742 trillion KRW).

Leveraged buyouts are an acquisition strategy mainly used by private equity funds, where funds are borrowed using the assets of the company to be acquired as collateral to purchase the company.

Kiki Yang, Co-CEO of Asia Pacific Private Equity, said, "Despite high uncertainty and geopolitical tensions, investors are still looking for attractive acquisition targets."

The reason why LBOs in the Asia region recorded an all-time high this year is analyzed to be because large-scale investment funds are still accumulated in private equity funds.

According to consulting firm Bain & Company, dry powder, which refers to unexecuted investment funds due to the lack of investments caused by the COVID-19 pandemic in 2020, surged to over $650 billion.

With the lifting of quarantine measures last year, large-scale private equity investments were made. The scale of private equity investments in the Asia region last year approached $300 billion, marking a record high. Investments delayed by COVID-19 have been made on a large scale last year and continuing into early this year.

Co-CEO Yang said she cautiously remains optimistic about the Asia private equity market in the second quarter. However, she warned that the Chinese stock market could lose momentum due to escalating geopolitical tensions and economic slowdown caused by COVID-19 lockdowns.