Duff & Phelps Publishes Transaction Trail Annual Report 2019

Deal activity lower but overall healthy levels remain, with values over US$100 billion from M&A, PE/VC investments and IPOs in Singapore, Malaysia and Indonesia

Duff & Phelps recently launched its Transaction Trail Annual Report, the flagship publication of the firm’s South East Asia practice. The report takes an in-depth look at transaction and capital markets activities, including mergers and acquisitions (M&A), private equity (PE) and venture capital (VC) investments as well as initial public offerings (IPOs), in Singapore, Malaysia and Indonesia (“Region”) over the course of 2019.1

In 2019, the Region recorded total deal value at about US$100 billion spread across 1,300 deals, with 10 M&A transactions and three PE/VC investments valued at more than US$1 billion each. Globally, more than 39,000 deals valued at over US$3 trillion were registered in the same period.2

Highlights from the report:

Singapore Continues to Lead Deal Making in the Region

Singapore recorded a total of 809 transactions (M&A, PE/VC and IPOs) worth US$81.2 billion for 2019 as compared to 857 transactions worth US$106.2 billion for 2018. M&A comprised the bulk of the deal volume in Singapore, constituting of 630 deals valued at US$72 billion in 2019, compared to 688 deals valued at US$99 billion in 2018.

M&A deal values continued to be driven by sizeable outbound M&A transactions by sovereign wealth funds (SWFs) in consortium investments, such as the acquisitions of Ultimate Software Group Inc. and Genesee & Wyoming Inc. for US$11 billion and US$8.4 billion, respectively. In addition, domestic M&A deals in Singapore increased by over 90% to US$18.9 billion over the prior year, driven by sizeable deals involving real estate companies and REITs during the period. Privatization and consolidations have been the key themes impacting the larger transactions this year.

Real Estate Sector the Main Driver of Singapore’s M&A Deal Value in 2019

In 2019, there were a total of 442 cross-border M&A deals in Singapore registering US$53.5 billion. The bulk of total deal value came from 291 outbound transactions (Singapore-based companies or SWFs acquiring overseas companies) worth US$47.5 billion, contributing to about 66% of the total M&A deal value in 2019. Domestic transactions contributed to 26% of total M&A deal value with 188 deals valued at US$18.9 billion in 2019.

The largest contributor to M&A deal values in Singapore was the real estate sector which has overtaken the banking, financial services and insurance (BFSI) sector, previously the top sector in 2018. Real estate contributed the most to M&A transactions, accounting for 32% of the deal values and 20% of the deal volume in Singapore with a total of 125 deals. Based on M&A deal values, the top three sectors (real estate, technology and industrials) accounted for 72% of the total.

New Record for Transacted Volume of PE/VC Investments in Singapore in 2019

PE/VC investments into Singapore companies continue to set record high levels of deal volume with 166 PE/VC investments in 2019, an increase over the 154 investments in 2018 and a dramatic growth over the recent years from 47 deals in 2014. Total PE/VC investments in Singapore accounted for US$6.5 billion in deal value for 2019, edging slightly lower than 2018 at US$6.6 billion.

Duff & Phelps Publishes Transaction Trail Annual Report 2019

Duff & Phelps Publishes Transaction Trail Annual Report 2019

Technology Sector Remains the Key Driver of PE/VC Deals in the Region

Over the past five years, the technology sector has been one of the largest contributors to PE/VC deals in the region. PE/VC investments into technology companies for 2019 retained its top sector ranking, accounting for 44% of total deal value, followed by the healthcare and real estate sectors at 18% and 16%, respectively. Top deals in the technology sector included the US$420 million investment in Traveloka Holding Ltd by GIC and other consortium investors, and the US$226 million investment in Zilingo Pte Ltd lead by Sequoia Capital and other consortium investors, along with six other PE/VC investments into technology companies with deal values exceeding or equal to US$100 million.

Singapore IPO Market Rebounds in 2019

IPO performance in Singapore witnessed a significant recovery in capital raised in 2019 at US$2.3 billion, about four times the amount raised in 2018, driven by the listings of several large REITs on the Singapore Exchange (SGX). Notable REIT listings on the SGX for 2019 included Prime US REIT, Eagle Hospitality Trust and Lendlease Global Commercial REIT.

Decline for M&A Activity Across Indonesia and Malaysia in 2019 

M&A deal values in Indonesia declined significantly for 2019, registering US$7.2 billion in deal value, down from the record high of US$15.1 billion in 2018; in line with the slowdown witnessed in deal activity with transaction volume decreasing from 130 M&A deals in 2018 to 94 M&A deals in 2019. BFSI was the largest sector in value terms exceeding US$4 billion in 2019, mainly due to sizeable inbound M&A deals involving Indonesian banks.

Duff & Phelps Publishes Transaction Trail Annual Report 2019

Duff & Phelps Publishes Transaction Trail Annual Report 2019

Malaysia experienced a similar broad decline in deal activity for 2019 with M&A, PE/VC and IPO valued at US$10.7 billion in 2019 compared with deal values at US$12.5 billion in 2018. The energy sector in Malaysia continued to witness high-value inbound and outbound deal activity for Oil and Gas (“O&G”) assets, followed by industrials which was the top sector for domestic M&A.

Duff & Phelps Publishes Transaction Trail Annual Report 2019

Duff & Phelps Publishes Transaction Trail Annual Report 2019

The two largest M&A transactions in 2019 for Malaysia were the corporate carve-out of Murphy Sabah Oil Company Ltd and Murphy Sarawak Oil Company Ltd by PTT Exploration and Production PCL; as well as the acquisition of Lingkaran Trans Kota Holdings Bhd by the Federation of Malaysia (Ministry of Finance).

Media coverage from the report:

 

Sources
1.December 2018 to November 2019
2.Source: Bloomberg (December 2018 to November 2019)

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