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M&As in Singapore down 28% so far this year

SINGAPORE'S mergers and acquisition (M&A) scene is off to a slow start this year.

According to a preliminary review by Thomson Reuters for the first quarter this year, overall M&A activity in Singapore reached US$8 billion, down 24.8 per cent from the year-ago period, as the number of announced deals fell 28 per cent.

Taking the lead for deal-making was the real estate sector, which accounted for 35 per cent of the market share worth US$2.8 billion, up 29.8 per cent in terms of deal value from a year ago. Materials took second place with deals totalling US$1 billion, a significant increase in value from the comparative period last year, Thomson Reuters said.

Nonetheless, total cross-border activity fell 57.8 per cent to US$3.3 billion, with Singapore's inbound M&A activity plunging 79.4 per cent in deal value.

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In particular, foreign acquisitions targeting Singapore-based companies reached US$516.8 million, representing "the slowest start to a year since 2012", Thomson Reuters said.

The industrials sector accounted for 44.2 per cent of Singapore's inbound M&A activity and totalled US$228.6 million.

Recording the biggest Singapore inbound activity thus far this year, Esteel Enterprise - through its unit BRC Asia - planned to launch a tender offer for the remaining shares that it did not already own in Lee Metal Group, a Singapore-based manufacturer of fabricated structural metal products, for US$209.3 million (including net debt of target), Thomson Reuters said.

Singapore's outbound M&A also fell 47.6 per cent to US$2.8 billion, as the number of outbound acquisitions declined 29.9 per cent.

Interestingly, China is the most targeted nation for Singaporean overseas acquisitions to date in terms of value and deal count. Singapore's overseas acquisitions in China reached US$923.4 million thus far this year, and accounted for 32.8 per cent of the market share.

Separately, private equity (PE) backed M&As in Singapore was down 92 per cent year-to-date, with US$53.1 million worth of deals so far this year. This came despite a 66.7 per cent increase in the number of PE-backed acquisitions.

PE-backed M&A activity targeted the high technology sector, led by the US$30 million acquisition of an undisclosed minority stake in Tyrb, a Singapore-based reproducer of software, by Makara Innovation Fund, which is jointly owned by Makara Capital and The Intellectual Property Office of Singapore.

Domestic M&A activity grew 30.3 per cent to US$1.2 billion.

Completed M&A deals involving Singapore rose 9.9 per cent to US$28.9 billion.

In line with this, M&A advisory fees from completed transactions in Singapore totalled US$99.1 million so far this year, a 4.9 per cent increase from the first quarter last year.

Leading the pack in fee rankings for completed M&A deals here was JP Morgan with US$43.5 million in related fees, followed by Credit Suisse (US$30.5 million) and Bank of America Merrill Lynch (US$6 million).