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S-E Asia M&A appetite down slightly amid increased competition: survey

MERGERS and acquisitions (M&A) demand in South-east Asia dipped slightly amid rising competition for assets and geopolitical disruption, according to the 19th EY Global Capital Confidence Barometer.

The biannual survey polled more than 2,600 executives across 45 countries, of which 192 are from South-east Asia. 46 per cent of corporate executives in the region are still planning acquisition activities, dipping from 50 per cent six months ago. In Singapore, deal appetite remained at 40 per cent – the same as six months ago.

83 per cent of Singapore correspondents did predict more M&A activity due to increased competition for assets, but are split on where they see the competition emerging from.

38 per cent see competition from private equity and 31 per cent from corporate investment funds. 30 per cent indicated private equity as a major theme in the M&A market for the coming year.

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83 per cent of Singapore corporates planning M&A cite cross-border as a priority, with the US, UK, Singapore, Malaysia and Australia as top investment destinations. The key drivers for South-east Asia and Singapore companies to pursue cross-border deals are to acquire talent and gain access to local markets.

However, due to the complex nature of cross-border deals and their integration challenges, Vikram Chakravarty, EY Asean transaction advisory services leader, said companies need to consider a deliberate approach to capture synergy as they pursue the deals.

Given the economic uncertainty, Mr Chakravarty sees value for companies to consider alternative approaches to portfolios, such as divestments and carve-outs. But as companies explore deals, he says it is crucial to make sure the target or deal fits the corporate strategy.