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Sovereign funds' M&As drive surge in capital market deals: Duff & Phelps

MERGERS and acquisitions (M&As) by sovereign wealth funds drove an almost doubling of capital market deals in Singapore in 2015, according to a report by corporate finance adviser Duff & Phelps.

There were 685 M&A, private-equity, venture-capital and initial public offering deals worth US$103.8 billion in Singapore this year, according to the report. That was almost twice the US$55.4 billion of deals in 2014.

M&A transactions accounted for US$101.2 billion of the 2015 total, which was twice the US$50.7 billion for 2014. The US$37 billion acquisition of Broadcom Corp by Singapore and California-based Avago Technologies was the biggest deal of the year, but Singapore government-controlled investors GIC and Temasek and companies linked to them were involved in the next six biggest M&A deals in Singapore.

The growth in deal volume was also present in the region. Total deal activity in Singapore, Malaysia and Indonesia rose 56 per cent to US$115.4 billion in 2015.

Looking ahead, Duff & Phelps said there were about 50 deals worth almost US$9.1 billion in the pipeline in which a buyer is already in negotiations.

"The rationale for such high level of deal activity have been the lower interest rates and the expectations of the same going up, coupled with the pick-up of economic activity in the US and sluggish growth in several other markets driving them towards inorganic growth, where organic growth is limited," Duff & Phelps managing director Srividya Gopalakrishnan said in a statement.

"We are also witnessing a considerable increase in the confidence level of Singapore companies as they start viewing the world as their global market and acquire large businesses across the world, which has led to this year seeing the outbound deal values more than double compared to last year."