Duff & Phelps Publishes Transaction Trail H1 2016
Singapore keeps up deal momentum with over US$40 billion worth of deals, capturing lion's share of transactions in the region in H1 2016
- Singapore experienced the second highest half-yearly M&A value in H1 2016
- Doubling in PE/VC investments from the previous period and significant bounce-back in the IPO markets in Singapore
- M&A deal making picks up in Malaysia and Indonesia, growing at 164% and 79% respectively over the past period
SINGAPORE - Global valuation and corporate finance advisor Duff & Phelps today released the key findings from its M&A publication, “Transaction Trail” report for the first half (“H1”) of 2016. The report takes an in-depth look at transaction and capital markets activities, including mergers and acquisitions (“M&A”), private equity (“PE”), venture capital (“VC”) and initial public offerings (“IPOs”), in Singapore, Malaysia and Indonesia (the “region”) over the course of H1 20161.
In H1 2016, Singapore, Malaysia and Indonesia recorded a total deal activity valued at US$54.2 billion spread across 655 deals. Globally, about 18,779 deals valued at over US$2 trillion were registered in the same period2.
Singapore remains at the helm of deal-making in the region
Singapore recorded a total of 383 deals (M&A, PE/VC and IPOs) worth US$43.4 billion for H1 2016, which compares with 685 deals (M&A, PE/VC and IPOs) worth US$103.8 billion for full year 2015. M&A comprised the bulk of the deal volume in Singapore registering 339 deals valued at US$40.5 billion in H1 2016, compared to US$101.2 billion, US$50.7 billion and US$36.1 billion for the full years 2015, 2014 and 2013 respectively.
The continued momentum in deal value was mainly contributed by sizeable M&A transactions by the Sovereign Wealth Funds (“SWF”), GIC and Temasek Holdings in consortium as well as stand-alone investments, complemented by other notable deals such as CMA CGM S.A.’s acquisition of Neptune Orient Lines Ltd, Qatar Investment Authority’s acquisition of Asia Square Tower 1 and Alibaba Group’s stake acquisition in Lazada South East Asia Pte Ltd.
Outbound deals continue to drive Singapore’s deal volume
While Singapore M&A deal volumes grew 16% in H1 2016, deal values declined by 35% compared to the same period a year ago. In H1 2016, there were 260 cross-border M&A deals in Singapore registering US$38.1 billion, with the bulk of total deal values coming from 165 outbound deals (Singapore-based companies or SWFs acquiring overseas companies) worth US$30 billion contributing to over 78% of the total deal value in H1 2016 for total cross border deals. Domestic deals contributed to 6.0% of total M&A deal value with 79 deals valued at US$2.4 billion.
The largest contributor to M&A deal values in Singapore was the Industrials sector which has overtaken last year’s leader, the Technology sector (that has moved to the fourth place). Industrials contributed approximately 30% to the deal values, while the Real Estate sector contributed the most to deal volume, accounting for over 18.8% of the deal volume in Singapore with a total of 63 deals. Based on M&A deal values, the top 3 sectors (Industrials, Real Estate, and Banking & Financial Services) accounted for 72.4% of total deal values.
Highest half-yearly transacted value of PE/VC deals in Singapore in H1 2016 since 2014
PE/VC investments in Singapore companies for H1 2016 have performed better based on their 6-month performance at US$1.6 billion compared with US$2.2 billion, US$2.4 billion and US$0.9 billion for the full years 2015, 2014 and 2013 respectively. Some of the notable PE/VC investments in H1 2016 were investment in BOC Aviation Pte Ltd by China Investment Corporation and other investors valued at US$572.0 million; GIC, Bain Capital and Advent International’s US$350.0 million investment into Quest Global Engineering Pvt Ltd; and Baring Private Equity’s US$320.1 million privatization of Interplex Holdings Ltd. Most of the notable deals were minority investments unlike the last few years, which saw more buyouts.
Significant pick-up in the Singapore IPO market
The Singapore IPO market has seen marked improvement in activity in H1 2016 compared to 2015, with a total of 7 IPOs constituting US$1.2 billion raised on the Singapore Exchange, compared with 13 IPOs in
2015 raising US$450.7 billion. The largest contributor to Singapore Exchange listings was Frasers Logistics & Industrial Trust which raised approximately US$664 million.
Bounce back in deal activity in Malaysia and Indonesia
Malaysia and Indonesia recorded 222 and 90 deals (M&A, PE/VC and IPOs) worth US$9.4 billion and US$2.6 billion respectively for H1 2016. This compares to 360 and 143 deals worth US$9.7 billion and US$2.8 billion for Malaysia and Indonesia respectively for full year 2015.
Will the “new normal” dampen the robust pipeline?
Looking ahead, there are over 100 deals in the pipeline in the region with potential deal value of over US$20 billion, based on information disclosed. These pipeline and possible deals include the proposed acquisition of Oil Search Ltd by InterOil Corp (potential deal value of US$2.2 billion), the proposed acquisition of Yes Communities by GIC (potential deal value of US$2 billion), as well as the potential sale of Chevron’s Asia geothermal assets (potential deal value of US$3 billion).
“We saw a record year of M&A deals in 2015 in the global market as well as in China and Singapore. Though we have not seen historical deal making levels this year, the activity has been fairly healthy, with global transactions valued at over US$2 trillion and Singapore deals at over US$40 billion for H1 2016,” said Srividya Gopalakrishnan, Managing Director, Duff & Phelps.
“The first half of 2016 has given us mixed signals with slowing growth in the developing markets, modest growth in the mature markets, fear of interest rate hikes, possibilities of recession in certain economies, but at the same time witnessing a robust M&A and investment climate. While we have seen many sizeable global deals in H1 2016, not all of them may see the light of day as many are still pending regulatory and other approvals, especially after witnessing US$100 billion plus deals such as Pfizer’s acquisition of Allergan getting cancelled due to regulatory issues. Also, as we see a significant interest from Asian and American companies to acquire UK and European assets during the first half of 2016, we cannot but wonder how the “new normal” Brexit situation will impact these going forward. It will be interesting to see how deal making will shape up for the rest of the year and to what extent restructuring would contribute to the transactions landscape going forward,” concluded Ms Gopalakrishnan.
1 January 2016 to June 2016
2 Source: Bloomberg (1 January 2016 to 17 June 2016)
+852 2281 0140
About Duff & Phelps
Duff & Phelps is the premier global valuation and corporate finance advisor with expertise in complex valuation, dispute and legal management consulting, M&A, restructuring, and compliance and regulatory consulting. The firm’s more than 2,000 employees serve a diverse range of clients from offices around the world. For more information, visit www.duffandphelps.com.
M&A advisory, capital raising and secondary market advisory services in the United States are provided by Duff & Phelps Securities, LLC. Member FINRA/SIPC. Pagemill Partners is a Division of Duff & Phelps Securities, LLC. M&A advisory and capital raising advisory services are provided in a number of European countries through Duff & Phelps Securities Ltd, UK, which includes branches in Ireland and Germany. Duff & Phelps Securities Ltd, UK, is regulated by the Financial Conduct Authority. - See more at: http://www.duffandphelps.com/about-us/news/news/duff-and-phelps-issues-report-on-brand-values-in-the-indian-premier-league#sthash.EiwWTu8n.dpuf
- Alternative Asset Advisory
- Compliance and Regulatory Consulting
- Disputes and Investigations
- Legal Management Consulting
- M&A Advisory
- Real Estate Advisory Group
- Restructuring Advisory
- Tax Services
- Transaction Opinions
- Consumer, Retail, Food and Restaurants
- Energy and Mining
- Financial Services and Asset Management
- Healthcare and Life Sciences
- Media and Entertainment
- Real Estate
- Technology and Telecom
- Alternative Assets
- Compliance and Regulatory
- Cost of Capital
- Disputes and Investigations
- Goodwill Impairment
- Legal Management
- Risk Premium
- Transfer Pricing
- Transaction Opinions
- Latin America
- U.S. / Canada