Companies across the Asia Pacific region are facing an urgent need for portfolio rebalancing, according to a new Deloitte Asia Pacific report.
The study, which highlights the necessity of APAC companies to increase scrutiny of their portfolio holdings as they seek to rebalance for growth opportunities and divest assets that no longer fit their strategy, reveals that 79% of executives expect to make two or more divestments in the next 18 months.
Deloitte enumerated five key external forces that are driving this need for portfolio rebalancing:
- Navigating geo-political tensions causing dislocation of marketplaces, supply chains and trade partner
- Capital efficiency regulation requiring companies to disclose capital returns below the threshold
- The rise of investor activism in Asia putting pressure on companies to address underperforming assets and divest non-core businesses
- ESG and the road to net zero 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 survey found that active portfolio management is becoming pivotal for how executives and boards are adjusting to these external forces.
Further, Deloitte's report advocates a move towards an "active portfolio management mindset", focused on building resilience and transformative growth through capitalising on growth opportunities and synergies as and when they arise.
