Rebalancing your portfolio to fuel growth
Faced with a challenging economy across the Asia Pacific region, a new Deloitte Asia Pacific report has highlighted the importance for companies to consider rebalancing their portfolios, as they look for growth opportunities and at divesting assets that are not on strategy or delivering threshold levels of return on capital.
The report, titled ‘Rebalancing your portfolio to fuel growth’, surveyed 250 executives across the region from private and public companies (most with revenues over US$1bn) on their evolving strategic goals and the forces driving portfolio reviews. The survey reveals that active portfolio management is crucial for Executives and Boards to adapt to challenging external forces. The report advocates a move towards an active portfolio management mindset.
Why does this matter now?
Alongside evolving strategic goals and the relentless and sometimes disruptive march of technology, the need to rebalance is driven by five powerful forces:
- Navigating geo-political tension is causing dislocation of marketplaces, supply chains and trade partners.
- Capital efficiency regulation (Japan, Korea and likely the rest of Asia) is forcing companies to disclose if capital returns are below threshold.
- The rise of investor activism in Asia is putting pressure on companies to address underperforming assets and divest non-core businesses.
- ESG and the road to net zero is triggering Boards and Executives to undertake deals and divestments to transition to a “green portfolio.”
- Private Equity’s increasing role as an investor and potential partner in asset portfolio optimisation choices.
The report also provides a roadmap to help clients navigate the complexities of the current economic landscape, equipping leaders with the strategic framework and actionable insights needed to drive their companies forward in a rapidly evolving environment.
