Singapore investment banking fees down 20% year to date, M&A value falls to decade low

INVESTMENT banking fees generated in the first three quarters of 2023 amounted to an estimated US$585.2 million, down 20 per cent compared with the first nine months of 2022, based on Refinitiv data released on Monday (Sep 25).

The amount includes advisory fees from mergers and acquisitions (M&As), which totalled US$183.6 million; this was about a third (32 per cent) lower than the nine-month period the year before.

The bank that captured the most investment banking fees in the year to date was DBS, which earned US$73.6 million, or 13 per cent of the total fee pool.

The M&A arena took a hit. The value of M&A activities involving Singapore fell 65 per cent to US$35 billion. This was also the lowest first-nine-month total since 2013, with deal-flow momentum continuing to slow.

Gavyn Ng, financial advisory partner at Mazars in Singapore, said market macros such as rising interest rates, consumer price index volatility, a weaker economy and geopolitical risks have played significant roles in the slowdown.

Additionally, funds and corporates have shifted their focus towards nurturing their existing portfolios, emphasising value creation and strategic and tactical improvements or alignments, he added.

“There’s a general consensus regarding a mismatch in valuations, where sellers are expecting a high price, while buyers are eyeing bargain purchases,” he said, noting that the cautious stance adopted by buyers and investors has continued to prevail post-Covid-19.

Deals this year up to Q3 involving a Singapore target came in at US$10.2 billion, down 70 per cent from the first-nine-month 2022 figure. It represented a decade low, despite a 13 per cent increase in the number of announced deals.

Financials remained the most targeted sector, making up 35 per cent of the total deal volume involving a Singapore target, but the highest number of deals was recorded in the high technology sector.

Meanwhile, Singapore equity and equity-related issuance reached US$2.9 billion in the first nine months of 2023, 5 per cent more than the corresponding period the previous year.

The number of issues increased 45 per cent from the prior year, with eight initial public offerings (IPO) recorded so far in 2023.

These include YKGI, the operator of Yew Kee Duck Rice, and bubble tea brand Chicha San Chen’s Singapore franchise, which raised US$12.7 million at its IPO in February. It is the largest Singapore IPO in the year to date.