The leveraged buyout (LBO) market in Asia-Pacific roared back to life in the first half of 2025, with announced deal volume soaring 398% year-on-year (YoY), marking the region’s strongest start to a year since 2020, according to Mergermarket data.

As at 17 June, announced LBO deal volume had reached USD 59.7bn in the year to date (YTD), a sharp rise from only USD 12bn over the same period in 2024. Deal count also ticked higher, with 127 transactions making the news so far this year, a 9% increase from 116 over the same stretch last year, per the data.

“We see a robust deal pipeline across regions and willingness by private equity (PE) to deploy on new transactions,” said Anshul Gupta, head of loan capital markets, South & Southeast Asia and Australia at BNP Paribas.

“However, we are seeing some slowdown in timelines, from origination to signing to closing, post the US tariff announcements,” he added. “This is especially true in sectors and countries more impacted by tariffs.”

Despite these headwinds, Gupta expects steady deal flow in the second half of 2025, particularly in markets with limited tariff exposure, such as domestic businesses in India, Australia and Japan. However, he cautions that rising geopolitical tensions in the Middle East could weigh on activity by unsettling global markets.

Against this backdrop, a recalibration of EV/EBITDA multiples across Asia-Pacific has created a more favourable entry environment for sponsors, particularly as public-market valuations have softened and private sellers adjust expectations, according to M&A and debt finance partners at global law firm A&O Shearman.

This valuation reset is also reshaping the dynamics at the negotiating table. Simone Lowes, a Sydney-based M&A partner at A&O Shearman, says that with more sellers seeking or requiring transactions, buyers are entering discussions with greater leverage.

Australia advances

Australia has cemented its position as APAC’s top LBO market in 2025, with USD 26.7bn of announced deal value across 23 transactions as at 17 June, according to Mergermarket. The country retained its crown from last year, reflecting sustained investor confidence.

Australian oil & gas giant Santos announced in June that it had received a AUD 29.03bn (USD 18.8bn) takeover bid from an Abu Dhabi National Oil Company (ADNOC)-led consortium, marking it as the largest LBO deal announced so far in 2025. The consortium also includes Abu Dhabi Development Holding Company (ADQ) and Carlyle. Lowes points to structural shifts underpinning this momentum.

“Structurally, the Australian market has seen a notable rise in public-to-private transactions and corporate carve-outs. These trends are largely driven by the undervaluation of listed companies and a wave of strategic portfolio realignments by corporates seeking to divest non-core assets,” she says.

Japan ranks second among Asia-Pacific’s LBO markets in 2025 YTD, with USD 18.6bn of LBO value from 45 deals, while China has claimed third place, with USD 9bn across only nine transactions. South Korea, overtaken by China, is down to fourth, with USD 2.4bn via 23 announced deals.

Japan’s volume was bolstered by three jumbo transactions in 1Q25: Bain Capital’s proposed acquisitions of the non-core assets of Seven & i Holdings (USD 4.7bn) and Mitsubishi Tanabe Pharma Corp (USD 3.3bn), as well as a KKR-led consortium’s USD 2.3bn management buyout bid for Topcon Corp.

A key contributor to China was a PAG-led consortium’s proposed takeover of 48 shopping malls from Dalian Wanda Commercial Management Group through a CNY 50bn (USD 6.94bn) fund, making it the second-largest LBO announced in APAC so far this year.

Meanwhile, deal flow in Southeast Asia has been more muted, according to Gupta. The region is more vulnerable to global uncertainties, which has tempered investor appetite, he says.

Digital a key driver

Oil & gas has emerged as the most sought-after sector for PE buyers in the region, attracting USD 24bn of announced deal value so far this year, almost 3x that of the next closest sector. Real estate follows, with USD 8.6bn, while the retail sector rounds out the top three at USD 6.8bn.The Santos deal has significantly boosted the region’s oil & gas volume.

“Sectors (Down Under) like healthcare, business services, infrastructure, energy and resources, technology and financial services are likely to see continued investment activity, especially where ESG and digital transformation are key value drivers”, says Lowes.

Gupta notes that digital infrastructure has also been particularly active in 1H25, driven by strong interest in data centres, fibre, and towers.

“Digital infrastructure has been very active including data centres, fibre, and towers with data centres in particular benefitting from AI tailwinds. Investors also prefer the stable cash flows generated by such assets in a more volatile geopolitical environment,” said Gupta.

Looking ahead, he expects PE investors to focus more on resilient sectors such as IT services, healthcare, and digital infrastructure – industries that are less exposed to tariffs and global trade disruption.

[Editor’s note: The ninth paragraph has been updated to include more information about the consortium.]