Southeast Asia (SEA) saw a strong start in private equity (PE) investment in the first quarter of 2026, with deal value surged 2.5 times year-on-year to $9.2 billion in the first quarter, EV said Tuesday.
According to its EY-Parthenon Southeast Asia Private Equity Pulse (Q1 2026), there were 19 PE-backed investments in the region during the first quarter, increased by 36 percent from 14 deals with $2 billion value a year ago.
SEA accounted for approximately 17 percent of total PE deal value in Asia-Pacific.
Singapore remained SEA’s primary hub for PE activity, accounting for 94 percent of deal value and 68 percent of deal volume across the region.
PE deals accounted for 33 percent of overall merger and acquisition (M&A) deal value in SEA during the first quarter of 2026, compared with 18 percent in the first quarter of 2025.
In the first quarter of 2026, robust PE deal activity was driven by global investors executing megadeals in the region, particularly within the digital infrastructure space.
Beyond infrastructure (77 percent), consumer (14 percent) and technology (7 percent) were the next most active sectors.
The outsized share of infrastructure deals was anchored by two megadeals in the data center segment – Coatue Management’s investment in DayOne Data Centers and KKR’s acquisition of the remaining stake in ST Telemedia Global Data Centers.
Investor appetite for digital infrastructure continues to intensify, underpinned by hyperscaler expansion, rising artificial intelligence (AI)-driven compute demand, data localization mandates, and the significant opportunity to scale power and connectivity assets across SEA’s structurally underpenetrated markets.
The region recorded six exits generating $1.7 billion in realized proceeds. Aggregate exit value increased by 75 percent year on year, while exit volume remained unchanged.
This increase was largely driven by TPG’s divestment of its majority stake in XCL Education to KKR for $1.3 billion.
“SEA seems firmly back in deal-making mode. Despite macroeconomic headwinds, investment momentum is strong, with capital flowing across sectors,
“Crucially, exits are gaining traction, restoring confidence and liquidity to the system. This dynamic creates a powerful flywheel that is likely to drive a more active investment and realization environment in the coming years,” said Luke Pais, EY-Parthenon Asean Private Equity Leader.
According to him, fundraising in SEA remained muted in the first quarter of 2026, reflecting a more measured approach from limited partners (LPs) amid a sharp global slowdown, as heightened uncertainty across global markets and the impact of the situation in the Middle East continue to weigh on investor sentiment.
It is noted that fifty-six percent of general partners (GPs) surveyed in the EY Global Private Equity Pulse Survey (Q1 2026) cited geopolitical and macroeconomic volatility as the biggest risk to portfolio performance over the next 12 to 24 months.
The next most significant risks indicated were a prolonged slowdown in exit activity (48 percent) and persistently high interest rates as well as financing costs (32 percent).
Across the broader Asia-Pacific region, only six Asia-Pacific based funds closed in the first quarter of 2026, raising $2.4 billion, compared with 28 Asia-Pacific-based funds raising $8.9 billion in the first quarter of 2025.
Uncertainty across global markets increased during the quarter following the escalation of conflict in the Middle East, which contributed to higher energy prices, renewed inflation concerns and tighter financial conditions.
Against this backdrop, global PE activity softened significantly in the first quarter of 2026.
The survey reveals that geopolitical and macroeconomic volatility remains the top concern for GPs, with 56 percent citing it as the greatest risk to portfolio performance over the next 12 to 24 months.
In SEA, while the impact of Middle East conflict has already weighed on fundraising sentiments, its broader impact on underlying deal activity is yet to be seen.
The region’s deal activity had been strong in the first quarter of 2026, supported by structural growth drivers and continued participation from Asia-Pacific-based investors.
While deal momentum had held up relatively well, near-term impacts are expected to be more visible in fundraising timelines, exit pacing and portfolio valuations, said EY.
The survey also highlighted three fund and portfolio imperatives that GPs should consider.
Firstly, reassessing exit strategies by adjusting sale processes and exit timelines to reflect asset- level exposure to geopolitical risk, valuation sensitivity and buyer risk appetite.
Secondly, strengthening portfolio resilience and risk management by assessing the impact of higher energy costs, inflation and tighter financing.
Thirdly, deploying capital selectively by staying alert to dislocation-driven opportunities, such as secondaries and special situations, while maintaining disciplined underwriting.
“The current economic environment underscores the importance of disciplined capital deployment and active value creation,
“Sponsors that can effectively manage cost pressures and build operational resilience across portfolios would be better positioned to unlock liquidity, capitalize on acquisition or bolt on opportunities and generate returns as market conditions normalize,” Pais concluded.
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