Regional Private Equity Funds in Southeast Asia are now looking to sell back their portfolio companies to the original family owners.

Regional Private Equity Funds in Southeast Asia are now looking to sell back their portfolio companies to the original family owners. These so-called "Promoter Buy-backs" are becoming increasingly more common as Funds reach their expiry life and investors seek the return of their locked-up capital.

This is obviously not a good sign given the drying up of the IPO markets and the tepid M&A activity. Restaurants are one of the worst sectors feeling the pain. There is virtually no interest on the part of the regional PE's in this sector given that many have been burned in the past.

I was recently surprised to read about PAG Capital's exit from Paradise Dynasty Group, a regional Chinese restaurant chain, through the sale back to the original family owners. I am sure that the tepid M&A and IPO markets played a large part in the decision. I worked on the original investment deal in 2016. Paradise Group was and still is a very well-operated business. This is just another indicator of the state of M&A in the region for food service overall, and full-service restaurants in particular. This could have been a good investment opportunity for a large USA or Japanese casual dining player if they were more open-minded and less risk-averse.