Singapore remains the leading deal-maker in the region, chalking up 800 deals worth a total US$88.1 billion (S$125.6 billion) for 2016, led by mergers and acquisitions (M&A) in the real estate sector, according to a report by global valuation and corporate finance adviser Duff & Phelps. Last year paled in comparison with 685 deals worth US$103.8 billion.
The continued momentum in Singapore was attributed to sizeable M&A transactions by the sovereign wealth funds (SWFs), GIC and Temasek Holdings, in consortium as well as stand-alone investments. But while this year’s deal volume — which covers mergers and acquisitions, private equity/venture capital (PE/VC) investments and initial public offerings (IPOs) — was 17% more than last year, values declined 15% from a record US$103.8 billion last year.
Singapore in fact experienced the second highest M&A deal value this year after the record hit in 2015, said the firm in its 2016 Transaction Trail report released on Dec 13. M&A deal volumes grew 16% in 2016, while deal values declined by 18% compared to the same period a year ago. The largest contributor to M&A deal values in Singapore was the real estate sector at close to 30%, overtaking the technology sector which was last year’s leader. Industrials, which came in second, accounted for roughly 19% of the total value, while the technology sector accounted for about 16%.
In the rest of the region covered by the firm’s report, Malaysia and Indonesia saw a bounce back in deal activity, recording 413 and 178 transactions worth US$15.6 billion and US$10.8 billion respectively this year. It was an improvement compared to 360 deals amounting to US$9.7 billion for Malaysia, and and 143 deals worth US$2.8 billion for Indonesia respectively in 2015.
The region (Singapore, Malaysia and Indonesia) recorded a total deal value of US$111.8 billion spread across 1,308 transactions, said the firm. Globally, about 35,192 deals valued at over US$3 trillion were registered in the same period.
“Clearly, Asia has emerged as a strong player in the M&A arena, overtaking Europe, driven by large outbound acquisitions by China, Singapore and other Asian countries in their quest to increase their global footprint,” said Duff & Phelps managing director Srividya Gopalakrishnan.
Looking ahead, she said there is a good pipeline for deals in the region as Asia takes a rising share in global deal values. However, she warned that sentiment is negative, stemming from the effects of Brexit, an “unusual” United States presidential election, the slow recovery in the energy sector, the weakness in the marine, offshore and oil and gas sectors, as well as other uncertainties. It will be interesting to see how deal-making shapes up in 2017.