3 megadeals push Singapore M&A activity up 26% in 2017: Baker McKenzie

THREE deals worth US$2 billion pushed mergers and acquisitions (M&A) activity in Singapore sharply higher in 2017, according to the third edition of the Global Transactions Forecast issued by Baker McKenzie.

Total M&A transaction for 2017 is expected to reach US$23.1 billion in 2017, up 26 per cent from 2016's US$18.3 billion, the global law firm said.

M&A accelerated in the consumer, energy and basic materials sectors in 2017, bolstered by the megadeals, said the report, adding that given the potential for stronger global consumer spending in 2018, dealmaking could click even higher in the consumer space in 2018.

The report predicts that total M&A activity could stay at the same level of US$23.1 billion in 2018 as it would this year, and peak at US$27.4 billion in 2019.

Singapore's GDP (gross domestic product) growth seems to have reached its cyclical peak, while a stronger Singapore dollar from late 2018 onwards will also tame US dollar deal values, it elaborated.

The outlook for domestic M&As is particularly strong with total value projected to rise from US$5.7 billion in 2017 to US$12.7 billion in 2018.

In the IPO (initial public offer) market, the total value of transactions involving Singapore is projected to see a strong increase next year, up from US$4.6 billion this year to US$5.98 billion in 2018.

Cross-border IPO transactions look set for a strong year too in 2018, projected to reach US$2.7 billion from US$1.7 billion in 2017.

"We predict a strong pickup in IPO activity as there should be some 'catch-up' from a very weak couple of years. With good economic conditions, relatively cheap finance, and strong equity markets, we should see a rebound in IPO volumes from the weak period between 2016-2017," said Ashok Lalwani, Baker McKenzie's head of the International Capital Markets Practice in Asia-Pacific.

In addition, the report also disclosed that a global ranking of the attractiveness of a market's environment for M&A and IPO activity puts Singapore in second place, after Hong Kong.

This ranking was derived based on several metrics such key economic, financial and regulatory factors that are typically associated with higher M&A and IPO activity. Singapore and Hong Kong are the only two Asian markets in this global ranking.