Transaction Trail 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 & Indonesia, growing at 164% and 79% respectively over the past period
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 period1.
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 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 privatisation 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).
4 July – The Straits Times: “Singapore M&A deals in H1 see 16 % rise in volume but 35% fall in value”
The continued momentum in deal value was mainly due to sizeable M&A transactions by Singapore Sovereign Wealth Fund GIC and the state investment firm Temasek Holdings in consortium as well as stand- alone investments. "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." said Duff & Phelps Singapore managing director Srividya Gopalakrishnan.
4 July – Business Times: “M&A Deal volumes rise but values drop in H1 2016: Duff & Phelps”
Singapore recorded 383 deals, including M&A, private equity and initial public offerings worth US$43.4 billion in the first half of the year, compared with 685 deals worth US$103.8 million for the full 2015 year. The industrials sector was the largest contributor to M&A deal values, accounting for 30 per cent of overall deal value, overtaking the technology sector which ranked top last year but has since moved to fourth place. The top three sectors - industrials, real estate and banking and financial services - accounted for 72.4 per cent of total deal value, according to Duff & Phelps.
4 July – Deal Street Asia: “Singapore leads with $40b of M&A in SEA, has highest PE/VC deals since ‘14”
“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.
5 July - Tech Wire Asia: Technology-related venture capital deals amounted to 16 percent of total investments made by Singapore, Malaysia, and Indonesia in the first half of 2016, making technology the third most-invested sector across the three countries, according to a new report.
6 July - The Indian Express: As many as 17 merger and acquisition (M&A) deals with a combined investment of $940 million have been made by Singapore companies with the Indian enterprises in the first half of this year, a global valuation services firm has said.
7 July - Deal Street Asia: Indonesia has recorded a 72 per cent increase in merger & acquisition (M&As) deal value in the first half of this year even as it sported a significant recovery in private equity and venture capital investments and IPOs compared to the same period last year. A report by investment bank Duff & Phelps shows the country recorded 90 deals worth $2.6 billion during the period.
4 July – Channel News Asia
Managing director of Duff & Phelps Srividya Gopalakrishnan said that the firm saw 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," she added. "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."
4 July – 93.8 Live FM
Singapore alone recorded a total of 339 deals and capital market worth nearly USD 40.5 billion in H1 2016. Accordingly to the transaction trail half yearly 2016 report released by Duff and Phelps.
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