Private equity exits in North America and Europe are currently challenging, while markets in Southeast Asia look attractive to invest into, an executive at alternative investment firm Investcorp said on Wednesday.

"North America and European exits remain challenged, it's frustrating," Hazem Ben-Gacem, co-chief executive officer of the Bahrain-based firm, told the Reuters Global Markets Forum from the WEF annual meeting in Davos, Switzerland.

PE firms announced 298 exits in 2023, a 28% decline in volume versus 2022, according to analysis by EY, while U.S. initial public offering (IPO) activity slumped to its lowest in years as higher interest rates and an uncertain economic outlook bit into investor appetite.

Investcorp, known for listing luxury brands such as Gucci, expects more acquisitions in Southeast Asian markets such as Thailand, Indonesia and Singapore as companies there benefit from rising costs of raw materials.

Inflation in the West is feeding into higher profits and margins in Southeast Asia, Ben-Gacem said, adding that the region's "immense momentum of trade" with China also adds to its attractiveness.

Investcorp hopes to close an acquisition of a local Indonesian brand within the next few weeks, Ben-Gacem said, without divulging details.

Meanwhile, Ben-Gacem expects a "vibrant" Middle Eastern IPO market, saying he wants to list two businesses there in 2024.

The firm is also eyeing local capital in China to facilitate exits from its investments there.

"There's a lot of liquidity in China looking for faulty businesses to acquire ... I think we can take advantage of that."

Speaking on Investcorp's $750 million climate fund launched last November, Ben-Gacem said the fund will initially focus on investments in the U.S. and Europe.

Investcorp, which manages around $53 billion in assets, is also eyeing investment in infrastructure and UK student housing-related real estate, Ben-Gacem said. (Join GMF, a chat room hosted on LSEG Messenger: https://tinyurl.com/yyr3x6pu)

(Reporting by Divya Chowdhury in Davos and Lisa Pauline Mattackal in Bengaluru)