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CERTAIN MOVES IN AN UNCERTAIN WORLD: Insights from the AlixPartners 18th Annual Turnaround and Transformation Survey Asia Report 2023
For 18 years, AlixPartners has conducted an annual survey of executives/professionals who
work with troubled companies from around the world.
This year, AlixPartners also surveyed an additional 200 experts in key Asian markets. The
largest components of this respondent group were hedge funds, private equity investors,
investment bankers, and other financial players, with approximately two-thirds based in
Southeast Asia. Overall, the largest responses were from Singapore (39%), Greater China
including Hong Kong (34%), and Malaysia (11%).
HEADLINE
FINDINGS
Overall, financial players in Asia expect the macro
environment in the coming 12 months to remain similar
or become more distressed than over the last 12 months.
This potential increase in distress is largely due to
ongoing inflationary pressures impacting corporate
profits and cashflow, and maturing credits that will need to
be refinanced at much higher interest rates. Corporates and
traditional lenders, many of whom are becoming more risk
averse, will struggle to find solutions that support stressed
profitability and higher interest costs.
Consequently, we are increasingly seeing a diverse group
of companies from a wide breath of industries show signs
of distress, beyond headline-grabbing industries such as
Chinese real estate and cryptocurrencies. This situation
is unlike previous cycles in Asia, where distress was
concentrated in specific industries (e.g., shipping and oil).
Anecdotally, we are supporting Asian companies across a
wide range of industries including retail, consumer goods,
and industrials. In addition to the broader macro trends,
nearly all of these companies are struggling with weak
demand, stressed supply chains and other industry or
company specific challenges.
Our annual Turnaround and Transformation survey
supports these observations. We expect the Asian
restructuring market to heat up in late 2023 and 2024
and are seeing signs of this trend across most of Asia
(ex-Japan).
Expect inflationary pressure to be similar
or higher in the next 12 months
74%
Expect corporates to be more likely
or as likely to be in distress as the
last 12 months
85%
Expect lenders' risk appetite to become
less risk-averse / remain the same
79%
Of lenders are more likely or as likely to
take actions against borrowers
92%
Expect that corporates will need to
undertake operational changes in
order to tap into liquidity markets
74%