Transaction Trail H1 2017

Singapore sustains momentum in M&A and doubles PE/VC investments in first half of the year. Malaysia and Indonesia show substantial growth in transactions.

• Singapore remains the driving force behind M&A deal-making in the region, with deal volume up 13% and deal value of US$ 42.6 billion
• Singapore contributes to over 70% of the M&A value in the region. .
• PE/VC investments in Singapore reached new record levels in excess of US$ 3 billion in H1 2017.
• Malaysia experienced record M&A deal volumes and grew 28% for deal values relative to H1 2016.
• Indonesia M&A deal value for H1 2017 doubled over the prior corresponding period.

In H1 2017, Singapore, Malaysia and Indonesia recorded a total deal activity valued at US$63.3 billion spread across 818 deals. Globally, about 19,900 deals valued at over US$1.5 trillion were registered in the same period.

Singapore remains at the helm of deal-making in the region

Singapore recorded a total of 485 deals (M&A, PE/VC and IPOs) worth US$46.1 billion for H1 2017, which compares with 383 deals (M&A, PE/VC and IPOs) worth US$43.4 billion for H1 2016. M&A comprised the bulk of the deal volume in Singapore registering 383 deals valued at US$42.6 billion in H1 2017, compared to 339 deals valued at US$40.5 billion in H1 2016.

M&A deal values continue to be driven 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 Exxon Mobil Corp’s acquisition of InterOil Corp, Mapletree Investments’ acquisition of US Student Housing Assets, Mercatus Co-operative’s acquisition of Jurong Point Mall, and Jacobs Douwe Egberts B.V.’s acquisition of Super Group Ltd.

Outbound deals continue to drive Singapore’s M&A deal value

While Singapore M&A deal volumes grew 13% in H1 2017, deal values grew by 5% compared to the same period in H1 2016. In H1 2017, there were a total of 294 cross-border M&A deals in Singapore registering US$37.1 billion, with the bulk of total deal values coming from 190 outbound deals (Singapore-based companies or SWFs acquiring overseas companies) worth US$29.2 billion contributing to over 68% of the total deal value in H1 2017 for M&A deals. Domestic deals contributed to 13% of total M&A deal value with 89 deals valued at US$5.4 billion.

The largest contributor to M&A deal values in Singapore was the Real Estate sector which has remained the top sector since 2016. Real Estate contributed approximately 29% to the deal values, while it also contributed the most to deal volume, accounting for over 23.6% of the deal volume in Singapore with a total of 90 deals. Based on M&A deal values, the top 3 sectors (Real Estate, Healthcare and Technology) accounted for 64% of total deal values.

Highest half yearly transacted value of PE/VC deals in Singapore in H1 2017

PE/VC investments in Singapore companies for H1 2017 have recorded their highest value based on their 6-month performance at US$3.2 billion compared with US$1.6 billion in H1 2016. Some of the notable PE/VC investments in H1 2017 were the investment in Grab Taxi Holding Pte. Ltd. by SoftBank Group and other investors valued at US$1.5 billion; Innovation Network Corp and Khazanah Nasional Fund’s US$600 million investment into edotco Group Sdn Bhd. Most of the notable PE/VC deals were minority investments.

Decline in the Singapore IPO Market

The Singapore IPO market has seen a sharp decline in value in H1 2017 with a total of 12 IPOs constituting US$300 million raised on the Singapore Exchange, compared to 7 IPOs in H1 2016 raising US$1.6 billion. Elsewhere, the Malaysia IPO market witnessed a significant growth in capital raised during H1 2017 with a total of 10 IPOs raising US$1.1 billion, compared to US$181 million for H1 2016.

Bounce back in deal activity in Malaysia and Indonesia

Malaysia and Indonesia recorded 256 and 118 deals (M&A, PE/VC and IPOs) worth US$13.6 billion and US$4.7 billion respectively for H1 2017. This compares to 222 and 90 deals worth US$9.4 billion and US$2.6 billion for Malaysia and Indonesia respectively for H1 2016.

“The region has shown a robust growth in M&A and investment activity in H12017, in spite of the negative outlook in certain sectors. Corporates and funds have been opportunistic in tapping into the global markets, leveraging low valuations in certain sectors and high growth in certain other sectors. Singapore has contributed to a significant part of the deal values, driven by outbound transactions, while Malaysia and Indonesia have contributed to the growth in deal making, driven by inbound investments”, said Ms. Srividya Gopalakrishnan, Managing Director, Duff & Phelps.

“When we look at the outlook for the second half of the year, on one hand, the market sentiments are negative which is leading to uncertainty in deal making. This is attributable to slower pick up in oil prices, a steady stream of bad news coming from the shipping and marine sector, a lack of large acquisitions in the private sector, a reduced number of IPOs, slowing growth in developing economies, and rapid and unprecedented changes in global regulations among other factors. Having said that, the silver lining is emerging stronger in the region with several positive developments. These include growth in M&A deal volumes and value, a significant increase in PE/VC investment, a strong IPO pipeline for the second half, improved infrastructure in developing countries due to non-traditional sources of energy, more alternate investment funds setting up a base in Singapore, significant development in the tech start-up ecosystem in Southeast Asia including an increase in tech Unicorns in the region, and several global companies setting up their Intellectual Property hubs in Singapore.

While it will be interesting to see how deal making pans out for the rest of the year, we are hoping for a sustained level of momentum in overall deal values and a pick-up in private sector transactions and investments, going forward.” concluded Ms. Gopalakrishnan.

Media Coverage:

Television Media

19 July - Channel News Asia, Big Listing, Flat Start: NetLink NBN Trust Closes At Offer Price

Print Media 

• 18 July - 联合早报, 我国上半年并购等大型交易总额同比增6.2%至632亿元
• 18 July - The Business Times, Singapore deal-making still growing strong, led by rise in M&As

Online Media 

• 17 July - The Star Online, Malaysia chalks up 233 deals worth US$11.7bil in first half-year
• 17 July - The Edge Markets, Outbound deals continue to drive Singapore as regional leader in M&A value
• 17 July - Jakarta Globe, Tech Sector Bolsters M&A Activity in Indonesia
• 18 July - Deal Street Asia, Singapore pushes up Southeast Asia’s deal activity in first half of 2017
• 18 July - Singapore Business Review, Singapore sustains momentum in M&A, doubles VC investment
• 18 July - The Business Time Online, Singapore deal-making still growing strong, led by rise in M&As
• 20 July - Deal Street Asia, Indonesia: M&A value doubles to $4b in first half riding on big-ticket deals
• 21 July - Deal Street Asia, Singapore M&A activity underpinned by GIC, with PE/VC on uptick
• 24 July - Deal Street Asia, Malaysia continues uptick in M&A activity with deals worth $13.6b in H1 2017: Duff & Phelps