Corporate deal value reaches 4-year high

In one of the biggest mergers and acquisitions of this year, Temasek Holdings acquired South Korean retail chain Homeplus Tesco for US$6.1 billion (S$8.5 billion).
In one of the biggest mergers and acquisitions of this year, Temasek Holdings acquired South Korean retail chain Homeplus Tesco for US$6.1 billion (S$8.5 billion).PHOTO: REUTERS

685 deals worth $145.6 billion recorded so far this year; most of them are M&As

The value of deals in Singapore, such as mergers, acquisitions and initial public offerings, almost doubled in the first 11 months of the year to a four-year high, new figures show.

Low interest rates and fluctuating expectations of a rate hike, as well as limited organic growth opportunities owing to a slowing global economy, have seen deal activity and value jump significantly this year.

A total of 685 deals - involving mergers and acquisitions (M&As), private equity, venture capital and initial public offerings (IPOs) - worth US$103.8 billion (S$145.6 billion) had been recorded as at Nov 30. This was the highest an-nual deal value logged in Singapore in four years, said Duff & Phelps, an American valuation and corporate finance adviser.

The figures are in line with a global trend of the volume and value of deals this year overtaking the previous highs of 2007, before the global financial crisis.

"2015 has been the 'Year of M&As', which has set records on the global deal-making front," said Duff & Phelps Singapore managing director Srividya Gopalakrishnan at a media briefing yesterday.

Locally, M&As accounted for the majority of the corporate transactions, with 591 deals worth US$101.2 billion taking place this year, compared with last year's US$50.7 billion. Most of these were cross-border transactions by Singapore-based companies acquiring overseas companies, totalling 279 deals at US$86.6 billion.

Singapore's sovereign wealth funds GIC and Temasek Holdings dominated the rankings of the biggest M&A deals this year.

GIC and its consortium partners bought out data storage company Veritas Software for US$8 billion while Temasek Holdings acquired South Korean retail chain Homeplus Tesco for US$6.1 billion.

The technology sector made the largest contributions to M&A activity, taking up 51 per cent of the total deal value. Real estate - last year's biggest contributor - came up tops in terms of deal volume. It accounted for 22 per cent of the total M&As with 129 deals.

Private equity and venture capital investments remained relatively stable in terms of value, at US$2.2 billion this year. But deal activity nearly doubled from 47 deals last year to 81 deals.

The IPO market recorded the worst showing, with only 13 listings valued at US$450.7 million this year, compared with 23 raising US$2.3 billion last year.

Ms Gopalakrishnan said that, overall, she sees a trend of more Singapore companies and those in the region looking at the global market for acquisitions.

The Asean Economic Community, which will kick off on Jan 1 next year, could also make it easier for deal-making in the region, given that Asean's 10 member states will be a single market and production base.

Transaction activities next year will depend on various factors, such as regional economic growth, interest rate movements and regulatory changes, said Ms Gopala-krishnan. And it will be interesting to see how deal-making will manifest itself then, she added.

"Based on the current deal pipeline, Singapore appears to have a head start and we may continue to see robust activity next year."

A version of this article appeared in the print edition of The Straits Times on December 11, 2015, with the headline 'Corporate deal value reaches 4-year high'. Print Edition | Subscribe