Rebalancing your Portfolio to Fuel Growth

In the post-COVID economy, companies across the Asia Pacific region are intensifying their scrutiny of portfolio holdings to rebalance for growth and resilience, and divesting assets that no longer fit. This report outlines the findings of our portfolio rebalancing survey and underlines the need for active portfolio management in today's dynamic market.

In Asia Pacific, companies are under growing pressure to rebalance their portfolios in response to a combination of factors: geopolitical tensions, capital efficiency regulations, investor activism, ESG considerations, and the growing influence of private equity. Companies seeking to build resilience and achieve transformative growth must take a more active approach to portfolio management.

Download to discover more insights and practical strategies in our full report

Download PDF (6MB) View PDF

Survey highlights

This report explores some of the key themes, and provides valuable insights and practical strategies to help company leaders evolve their thinking around portfolio management and divestment.

Active Portfolio Management and Capital Efficiency

Active portfolio management is crucial in the post-COVID world, where companies face dislocation of marketplaces, regulatory changes, and investor activism. Developing resilience and transformative growth capabilities are essential for thriving in this environment.

Survey finding:

60% of companies in Asia Pacific now review their portfolios at least twice a year, up from 54% globally in 2022.

Key insights:

Companies must ensure their portfolios align with their overall strategic direction. Regular assessments help identify non-core assets and reallocate resources to more promising areas.
Companies need to be agile to respond to geo-political tensions, regulatory changes, and market disruptions.
Companies that adopt an 'always-on' approach to portfolio management are better positioned to navigate external pressures and capitalise on growth opportunities.

Download Chapter 1: Active portfolio management and capital efficiency

Protect Value by being Divestment Ready

Value preservation throughout the divestiture process requires meticulous planning and strategic foresight. Our survey highlights the importance of preparation, with deal-ready sellers being three times more likely to exceed deal-value expectations.

Survey finding:

36% of respondents highlighted the execution of value-creation initiatives prior to divestment as a significant factor in achieving higher-than-expected deal values.

Key insights:

Develop a strong narrative that highlights the asset's growth potential and standalone viability.
Ensure the divested entity can function autonomously to enhance its appeal to buyers, including disentangling shared systems and staff.
Early and effective communication with stakeholders is crucial to managing change and maintaining confidence.
Developing detailed separation financials and robust data builds credibility and transparency, crucial for attracting buyers.

Download Chapter 2: Protect value by being divestment ready

Alternate Deal Structures and Private Equity

Corporates in Asia Pacific are increasingly considering joint ventures, partnerships, and strategic alliances as alternatives to outright sales. Private equity is playing an increasingly significant role in companies’ rebalancing activities; a trend that will be amplified by record levels of dry powder in need of an investible home.

Survey findings:

96% of respondents consider joint ventures as an exit route.
50% of divestitures involved domestic private equity buyers.

Key insights:

Private equity firms bring agility and creative structuring, providing strategic benefits to divesting companies.
Financial investors may also bring valuable industry knowledge and networks, enhancing the value of the divested asset, making them especially attractive to companies aiming to retain an option to buy back in.
Private equity partners require a different approach – earlier and more flexible.

Download Chapter 3: Alternate deal structures and private equity

ESG as a Critical Driver of Deal Value

ESG considerations are now central to strategic decision-making. Companies that integrate ESG into their corporate strategy are better positioned for higher valuations and long-term success.

Survey findings:

60% of respondents frequently discuss ESG during divestitures.
Strong ESG credentials can lead to better operational efficiency, talent attraction, and lower cost of capital.
ESG-aligned companies are significantly more attractive to buyers.

Key insights:

ESG practices can drive revenue growth by attracting ESG-conscious customers and creating new revenue streams.
Improved operational efficiency through sustainable practices can lead to cost savings and enhanced productivity.
A strong ESG proposition builds trust and goodwill with stakeholders, enhancing the company's market position.

Download Chapter 4: ESG is a critical driver of deal value

How tax impacts deal success and values

Tax and legal structuring are critical to maximising the value of divestitures and managing post-deal challenges.

Survey finding:

31% of respondents indicated that tax attributes played a significant role in achieving higher-than-expected valuations.
Effective tax planning and legal structuring are essential to preserving value and ensuring a smooth post-deal transition.

Key insights:

Optimise transactions to minimise tax liabilities and maximise after-tax returns.
Address regulatory compliance and structuring to support seamless transitions and value preservation.
Early consideration of tax and legal implications can prevent costly issues and enhance deal value.

Download Chapter 5: How tax impacts deal success and values