Buyout firms and asset managers are moving in on billions of dollars of infrastructure assets across Southeast Asia, lured by the sector's growth prospects and stable, long-term returns, bankers and analysts say.

Merger and acquisition deal volume is up in the sector so far this year, data shows, and a healthy pipeline of deals could make Southeast Asia a rare bright spot for global funds as they grapple with rising finance costs and slumping markets.

"Southeast Asia is a highly sought-after market given the compelling growth outlook for infrastructure assets," said Ee-Ching Tay, head of investment banking for Southeast Asia at Barclays.

About 210 deals targeting Southeast Asia's industrial and telecoms sector have been announced so far this year, exceeding the 184 from the same period a year earlier, Refinitiv data shows.

"Infrastructure assets are generally underpinned by long-term contracts, providing certainty of cashflows, which allows them to attract debt at high gearing to improve returns to investors," said Gilles Pascual, who leads EY's activities in Southeast Asian power & utilities sectors.

The region, with its relatively resilient economic growth, has attracted interest in contrast with other places facing slowdowns and even recession as policymakers battle inflation.

Indonesia, the region's biggest economy, reported gross domestic product growth of 5.4 percent in April-June from a year earlier, the fastest in a year, while Vietnam grew 13.7 percent in the third quarter, its fastest pace in decades.

"Favorable structural drivers such as local market reforms and rising urbanization and consumption" have also fostered rapid growth in investment opportunities in recent years, said Michael De Guzman, a managing director at KKR's infrastructure team.

KKR said last month it had raised more than $4 billion for its latest Asia infrastructure fund, topping the $3.8 billion raised for its inaugural Asia Pacific fund, which completed fundraising in 2021 and had been the largest such fund in the region.

(Source: Reuters with edits)