Singapore deal-making still growing strong, led by rise in M&As
Singapore
DEAL making in Singapore is continuing an upward track.
The trend was led in the first half of the year by the growth of mergers and acquisitions (M&As) - in terms of both volume and value of deals.
There was also a doubling in value of private equity (PE) and venture capital (VC) investments, even as the initial public offering (IPO) market recorded a sharp year-on-year drop in value.
Between last December and June 2017, Singapore recorded a total of 485 deals worth US$46.1 billion, up from 383 deals valued at US$43.4 billion in the corresponding period a year ago, said a Duff & Phelps report on Monday.
Of all Singapore deals made, M&As contributed the most in terms of volume and value; there were 383 such deals worth US$42.6 billion registered in H12017, more than the 339 deals worth US$40.5 billion a year ago.
The report, titled "Transaction Trail", said outbound deals (in which Singapore-based companies or sovereign wealth funds or SWFs buy overseas firms) accounted for about 68 per cent of the total deal value, compared with 66 per cent last year.
This was followed by inbound deals (19 per cent) and domestic deals (13 per cent).
Duff & Phelps said: "M&A deal values continue to be driven by sizeable M&A transactions by the SWFs, GIC and Temasek Holdings in consortium as well as stand-alone investments, complemented by other notable deals such as Exxon Mobil Corp's acquisition of InterOil Corp, Mapletree Investments' acquisition of US student housing assets, Mercatus Co-operative's acquisition of Jurong Point Mall, and Jacobs Douwe Egberts's acquisition of Super Group Ltd."
The largest contributor to M&A deal values here was the real estate sector (29 per cent), followed by healthcare (25 per cent) and technology (10 per cent).
PE and VC investments in Singapore companies in the first half of this year came in at US$3.2 billion, double that of the year-ago period, said the report.
The IPO market, on the other hand, fell from seven IPOs raising US$1.6 billion in H12016 on the Singapore Exchange to US$300 million raised from 12 IPOs in H12017.
Looking to the region, total deal activity in the first half of the year registered in Singapore, Malaysia and Indonesia was US$63.3 billion from 818 deals, led by M&As in Singapore.
In H12016, total deal activity was US$54.2 billion from 655 transactions.
Malaysia and Indonesia recorded a total of 256 and 118 deals worth US$13.6 billion and US$4.7 billion respectively in H12017, up from 222 and 90 deals worth US$9.4 billion and US$2.6 billion a year ago.
Srividya Gopalakrishnan, managing director at Duff & Phelps, said: "Corporates and funds have been opportunistic in tapping into the global markets, leveraging low valuations in certain sectors and high growth in certain other sectors.
"Singapore has contributed to a significant part of the deal values, driven by outbound transactions, while Malaysia and Indonesia have contributed to the growth in deal making, driven by inbound investments."
Turning to the outlook for the second half of the year, she said that uncertainty could come from factors such as the slower pickup in oil prices, a steady stream of bad news coming from the shipping and marine sector, a lack of large acquisitions in the private sector, a reduced number of IPOs and slowing growth in developing economies.
But there are some positive trends emerging in the region, which could buoy the second half of the year, she added. These include growth in M&A deal volumes and value, a significant increase in PE/VC investment, a strong IPO pipeline, improved infrastructure in developing countries due to non-traditional sources of energy and more alternate investment funds setting up a base in Singapore.
Ms Gopalakrishnan added that the tech startup ecosystem could also make significant strides in South-east Asia, a trend that would include a rise in the number of tech unicorns in the region, as well as several global companies setting up their intellectual property hubs in Singapore.
