M&A Asia fueled by Southeast Asia and private equity deals


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M&A activity in Asia reached its second-highest level on record for a first half, as Southeast Asia and private equity transactions hit record highs, and bankers s ‘expect the strong momentum to continue for the rest of the year.

Announced deals involving Asian companies totaled $ 707.7 billion in January-June, up 75% from the same period a year earlier and not far from the record high of $ 758.6 billion. in the first half of 2018, according to data from Refinitiv.

Transactions in Southeast Asia jumped 83% to a record $ 124.8 billion thanks to successful deals, including the $ 40 billion merger of ride-sharing giant Grab with company D Specialized American Acquisition (SPAC) Altimeter Growth Corp.

Bankers expect Southeast Asia to remain a negotiating priority.

“You still haven’t seen the demand for investment come in because the Southeast Asian region is still in its early stages of recovery, but you will start to see this reappear alongside the demand for refinancing and consolidation and mergers and acquisitions, “said Amit Khattar, Head of Investments. bank, Asia-Pacific, at Deutsche Bank.

It expects mergers and acquisitions in digital infrastructure such as data centers, telecom towers and the consumer sector, as well as real estate transactions, particularly in Singapore, as companies reassess the markets for offices.

Other big deals in Southeast Asia include the $ 18 billion merger of Grab’s Indonesian rival Gojek with local e-commerce firm Tokopedia, and a $ 15 billion merger of the company’s units. Malaysian telecommunications company Axiata Group and Norwegian company Telenor.

“We’re only halfway through the year, but if market conditions remain constructive and based on our order book, we look well positioned to break all records,” said David Biller, Head of Sales. Citigroup’s banking, capital markets and advisory activities in Southeast Asia.

“The themes continue to be technology, consumerism and health. The spread of capital market transactions and mergers and acquisitions is widespread in all countries.

Transactions backed by private capital more than doubled to a record $ 102 billion.

Asia-focused private equity funds raised $ 80.5 billion as of June 25, up 59% from a year ago and the most in two years, according to data provider Preqin. Dry powder in the region hit a new high of $ 384.9 billion in June.

The MOU deals were also fueled by improving banks’ appetite for loans, with many businesses in the region rebounding from last year’s pandemic-induced crisis.

Acquisition-related financing in the region soared 16% to $ 57 billion as of June 25, according to Dealogic data.

Private equity firms have flocked to auctions of assets such as Hong Kong-based mattress maker King Koil and the Chinese unit of drug maker Mundipharma, which is owned by the US billionaire Sackler family.

The sale of the Reckitt Benckiser Group’s infant formula business in China was another example, with Primavera Capital Group emerging victorious from a host of rivals that included Sequoia Capital, KKR and Carlyle Group.

“The focus remains on buying and exiting sponsors and in particular on companies that have resisted throughout the COVID-19 pandemic,” said Rohit Satsangi, co-head of mergers and acquisitions in Asia and responsible for financial sponsors in Asia.

PSPC-related transactions have slowed as regulators tighten oversight, but bankers are hopeful that many discussions of so-called de-spac deals, when PSPCs merge with target companies, will lead to transactions in the coming years. month.

“Investor optimism about the emergence of disruptive and fast-growing companies in the new sectors of mobility, renewable energy and technology is an important factor driving the activities of de-SPAC and of mergers and acquisitions, ”said Rich Wong, mergers and acquisitions manager of Morgan Stanley, Asia Pacific.

Morgan Stanley took first place in the region’s M&A ranking for announced deals, followed by JPMorgan and Goldman Sachs.

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