Dealmaking in key Asean economies at all-time high

Singapore

DEALMAKING in Singapore, Malaysia and Indonesia saw a high from December last year to November this year compared to two years ago, with Singapore accounting for the bulk of deal volumes.

An annual round-up of mergers and acquisitions (M&A), private equity and venture capital (PE/VC) and initial public offering (IPO) deals by global valuation and corporate finance adviser Duff & Phelps found that the overall transaction value in the three countries saw a high of over US$130 billion, exceeding the last high of US$115 billion in 2015.

This was driven by a significant increase in PE buyouts, Duff & Phelps said. "Deal values in 2017 in the region going above the 2015 highs show increasing confidence level of companies in the region, which have started looking at the world as their global market for acquisitions."

The company examines all transactions from Jan 1 to Nov 30 each year, including any deals made in December of the preceding year, and classifies them under the present year.

From December 2016 to November 2017, a total of 1,420 M&A, PE/VC and IPO deals were recorded in Singapore, Malaysia and Indonesia, with over 20 transactions valued at more than US$1 billion each.

Singapore recorded the majority, with 842 deals worth US$101.9 billion for the period in 2017, compared with 800 deals worth US$88.1 billion in the same period in 2016.

M&A comprised the bulk of the deal volume in Singapore, constituting 698 deals valued at US$75.4 billion in 2017, compared with 684 deals valued at US$82.7 billion in 2016.

M&A deal values continued to be driven by sizeable outbound M&A transactions by sovereign wealth funds, GIC and Temasek Holdings in consortium, along with other notable M&A deals including Mitsui Sumitomo Insurance's acquisition of First Capital Insurance Ltd, and Mapletree Investments' acquisition of US Student Housing Assets.

In Singapore, although the number of M&A deals increased to 698 between December 2016 and November 2017 from 684 in the same period the year before, the value of the deals dropped about 8.8 per cent. The same trend was noted for the period December 2015 to November 2016, when deal values fell about 18.2 per cent but volume increased 15.8 per cent.

On whether this trend will continue for the next few years, Srividya Gopalakrishnan, managing director, Duff & Phelps, told The Business Times: "Generally, we are seeing a healthy transaction activity based on what we see in the market. The activity will be robust."

Ms Gopalakrishnan added that it will be difficult to determine the volume and value of future deals.

Malaysia has seen a strong momentum in deal activity, with total deals in M&A, PE/VC and IPO valued at US$20.3 billion from December 2016 to November 2017 compared with US$15.6 billion in the same period a year ago. This is the highest deal value recorded in the last five years, Duff & Phelps said.

Deal activity in Indonesia has maintained similar levels for 2017, with total deal value at US$9.6 billion, driven by sizeable transactions in the technology, materials and agriculture sectors.

Duff & Phelps highlighted that a notable trend is that the lines between M&A and PE transactions are blurring, with several financial investors doing control transactions and strategic investors taking minority stakes. It added that the recent trend is to start looking beyond real estate. "This will require a further impetus to start focusing on intellectual property and intangible asset-driven sectors."