ICT leading sector in terms of deals volumes and value driven by investments
Many investments in e-commerce, digital media and alternative payment startups
IN 2014, the Asia Pacific Foreign Direct Investment (FDI) inflows accounted for one-third of global FDI inflows, making the region a hotspot for cross-border investments, according to Frost & Sullivan.
The positive investor sentiments in Asia Pacific were reflected in the global deals wherein Asia Pacific contributed around 20% to 25% of the overall deal volumes every year between 2010 and 2015, it said in a statement.
Investments in the ICT (information and communication technology), energy and healthcare sectors by venture capital, private equity as well as strategic investors (through mergers and acquisitions) 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, Frost & Sullivan said.
Globally, healthcare emerged as the second most important sector (due to the focus on biotechnology and healthcare equipment), while investments in Asia Pacific 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,” said Sanjay Singh, vice-president of Business & Financial Services at Frost & Sullivan Asia Pacific.
“Key sectors for growth include the Internet-linked businesses, media, semiconductors, Telecom, Media and Technologies (TMT), healthcare, restaurants, FMCG (fast-moving consumer goods) and real estate – especially in the distressed asset spaces.
“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 Asia Pacific. 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.
In 2014, there was a proliferation of investments in e-commerce, digital media and alternative payment solutions startups in the technology space within Asia Pacific.
From an investor perspective, Asia-based startups received a boost, with more than US$10 billion invested in Asian startups over the last five years.
Two Asia-based startups (Flipkart and Xiaomi) raised more than US$1 billion in funding, Frost & Sullivan noted.
“We also expect the upcoming formation of the Asean Economic Community (AEC) to usher in more FDIs, especially in the infrastructure-related sector, creating opportunities for regional startups,” said Ajay Sunder, vice-president of the ICT practice at Frost & Sullivan Asia Pacific.
E-commerce, digital advertising and cloud-based startups are expected to be the focus sectors for Asia Pacific investors.
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