Valuation dips for financial service M&As in S-E Asia despite more deals and global surge in ‘megadeals’: EY

[SINGAPORE] South-east Asia recorded 58 merger and acquisition (M&A) deals in the financial services sector during 2025, 10 more than in 2024.

However, total valuation halved to US$2.1 billion from US$4.2 billion – bucking the global trend.

Global M&A activity surged 49 per cent in value year on year during 2025, reaching US$418.9 billion, data from EY revealed on Monday (Mar 23).

Globally, the total number of deals rose to 2,236 transactions from 2,219 in 2024, and the large jump in value was driven by a sharp rise in high-value “megadeals”.

There were 93 deals announced above US$1 billion in value, representing 81 per cent of deal value. This marks a significant increase from the 54 large-scale deals recorded in 2024.

About 10 per cent of all transactions were driven by private equity or venture capital firms, with the remainder occurring between corporate institutions.

Sector performance in South-east Asia

Within South-east Asia, deal value for the banking sector fell to US$1.2 billion in 2025 from US$2.3 billion, despite a rise in deals to 35 in 2025, from 32.

Insurance deals fell in both volume and value – to 11 from 12, and halved to US$800 million from US$1.6 billion.

Wealth and asset management deals increased to 12 in 2025 from four in 2024, but total deal value declined to US$28 million from US$300 million.

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The number of firms from outside South-east Asia acquiring targets in the region declined to 24 in 2025 from 31, with total deal value dropping to US$700 million from US$4.2 billion.

South-east Asia firms acquiring overseas targets decreased to 10 in 2025 from 16 in 2024, and total deal value fell to US$100 million from US$1.1 billion.

Sumit Narayanan, EY Asean financial services leader, noted that the dip in South-east Asia’s deal value signals a strategic move towards smaller acquisitions and minority investments over transformative deals.

“High funding costs and valuation gaps between buyers and sellers have made it harder to pursue mega deals. Greater regulatory and capital scrutiny have also made firms more cautious,” he said.

“Hence, many are focussing on investments that enhance their capabilities in areas such as digital services, payment solutions and wealth management. This reflects a more disciplined, risk-adjusted growth strategy amid macroeconomic and geopolitical uncertainties,” Narayanan added. 

Looking forward, Stuart Last, EY-Parthenon partner, financial services at EY, said: “Singapore, as a regional hub for financial services, is expected to drive increased deal activity in 2026, particularly in the insurance, and wealth and asset management sectors.”

“Further, in the fintech sector, we expect to see profitable regional platforms building towards IPOs (initial public offerings) in the medium term but with interim funding rounds anticipated in the coming years,” he added.

Regional performance

The M&A landscape showed varied results across major international markets.

In North America, total deal value increased to US$188.7 billion from US$166.9 billion, despite a 5 per cent year-on-year decline in deal volume to 947 transactions.

Europe saw a 6 per cent increase in deal volume (759 deals) while total value nearly tripled to US$141.2 billion, boosted by 30 deals exceeding US$1 billion and two deals surpassing US$10 billion in value.

In Asia and Oceania, publicly disclosed deals reached 360, with total deal value rising to US$65.5 billion.

Within the broader Asia and Oceania markets, banking remained the largest sector by value at US$45.1 billion, despite a slight drop in deal volume to 185.

Insurance deals rose to 87 with a value of US$11.1 billion, while wealth and asset management recorded 88 deals, 10 less than last year, even as value surged to US$9.3 billion from US$2.3 billion.