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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.

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.

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

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

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

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

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

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