During 2026, private equity (PE) dealmaking in Southeast Asia (SEA) began with strong momentum, driven by global investors executing megadeals in the region, particularly within the digital infrastructure space. The overall deal value surged four and a half times year on year (y-o-y), while the deal volume increased 36 per cent over the same period last year. The SEA region accounted for approximately 17 per cent of total Asia-Pacific PE deal value in Q1 2026, up from just 4 per cent in Q1 2025. Moreover, institutional investors continue to show strong appetite for high quality private debt assets in Asia-Pacific, particularly infrastructure, project finance and other cash flow generating real assets.   

EY recently released a report, “Southeast Asia Private Equity Pulse”, highlighting the ongoing dealmaking momentum, the key sectors in focus, regional concentration trends and the emerging portfolio risk factors. Key excerpts…   

Infrastructure sector takes centre stage

The infrastructure sector accounted for a dominant 77.1 per cent of the total deal value in Q1 2026, followed by the consumer (14.5 per cent) and technology sectors (7.0 per cent). The outsized share of the infrastructure sector was driven by two megadeals in the data centre segment – Coatue Management’s investment in DayOne Data Centres worth $2,000 million and KKR’s acquisition of the remaining stake in ST Telemedia Global Data Centres worth $5,100 million.

The investor focus on digital infrastructure continues to intensify, supported by hyperscaler expansion, artificial intelligence (AI)-driven compute demand, data localisation mandates and the significant opportunity to scale power and connectivity assets in SEA’s structurally underpenetrated markets.

Across the region, banks are now increasingly partnering with private debt managers through asset rotation and securitisation to recycle credit risk and expand lending capacity. Recent examples include Clifford Capital’s $705.5 million infrastructure loan securitisation and BizLink’s strategic push into the AI data centre value chain by agreeing to acquire Singapore-headquartered Interplex Datacom from Blackstone-backed Ennovi for up to $900 million. The all-cash transaction values the target at an initial $850 million, alongside an additional $50 million in contingent consideration, which will be funded through internal cash and committed debt financing from Citigroup. This acquisition strengthens BizLink’s positioning to become a comprehensive “one-stop shop” for integrated data centre solutions by combining its existing electrical and connectivity components, such as wire harnesses, connectors and cables, with Interplex’s complementary manufacturing capabilities for structural and mechanical components used in AI server racks.

Besides, improving exit activity also provided an encouraging signal for capital recycling, supporting a more constructive outlook for sponsors in the quarter ahead. Sponsors that can balance prudent deployment with active portfolio management will be best placed to benefit as market conditions evolve.

Mapping the impact of the Middle East conflict on SEA

PE activity

Uncertainty across global markets increased during Q1 2026 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 Q1 2026.

In the region, 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. Deal activity had been strong in Q1 2026, supported by structural growth drivers and continued participation from Asia-Pacific-based investors. The near-term impact is expected to be more visible in fundraising timelines, exit pacing and portfolio valuations.   

Given the evolving geopolitical developments, there are several fund and portfolio imperatives that can be considered. First, exit strategies can be reassessed, carefully considering whether sale processes and exit timelines require adjustments based on asset-level exposure to geopolitical volatility, shifting valuation sensitivities, and changing buyer risk appetites. Second, enhancing portfolio resilience and risk management is critical. Managers should measure the impact of higher energy costs, inflation and tighter financing conditions on overall performance while actively ensuring adequate liquidity, strict cost discipline and operational resilience. Finally, adopting a strategy of selective capital deployment allows investors to remain alert to opportunities arising from market dislocation, particularly within secondaries, structured equity and special situations, while maintaining disciplined underwriting and prudent capital allocation.   

For the next 12-14 months, some of the greatest risks to PE portfolio performance include geopolitical or macroeconomic volatility, prolonged slowdown in exit activity, persistent high interest rates or financing costs, multiple compression at exit, sector-specific disruption (e.g., AI and regulation), slowing revenue growth across portfolio companies, refinancing risk for leveraged companies, deteriorating credit quality among borrowers and increased competition reducing deal quality.

Looking ahead

While near-term geopolitical headwinds and macroeconomic uncertainties may temper fundraising momentum and delay exits, SEA’s private equity landscape in 2026 underscores the vital importance of selective capital deployment and active portfolio management. Sponsors who effectively navigate cost pressures and build operational resilience will be uniquely positioned to unlock liquidity and generate outsized returns as market conditions normalise.

The region is increasingly being viewed as one of the most compelling growth opportunities in private debt. Despite representing only 6 per cent of global private debt asset under management (AUM), the region accounts for more than one-third of global GDP, a mismatch that points to structural under-penetration and highlights significant room for market expansion. In line with this, the Asian Development Bank estimates that developing Asia will require more than $25 trillion in infrastructure investment through 2030. Compounded by rapid urbanisation, ongoing digitalisation, and rising regional consumption, this massive financing demand is paving the way for an expanded role for private debt.

Moreover, Southeast Asia’s private debt and investment opportunities will increasingly be shaped by long-term structural themes across infrastructure, logistics, manufacturing, and the digital economy, alongside growing avenues for special situations strategies.