SINGAPORE - Singapore remained at the helm of deal-making in the region, chalking up a total of 800 deals worth US$88.1 billion (S$125.6 billion) for 2016, which compares with 685 deals worth US$103.8 billion last year, according to global valuation and corporate finance adviser Duff & Phelps.
In the rest of the region covered by the firm's report, Malaysia and Indonesia saw a bounce back in deal activity, recording 413 and 178 transactions worth US$15.6 billion and US$10.8 billion respectively for 2016. This was an improvement compared to 360 and 143 deals worth US$9.7 billion and US$2.8 billion for Malaysia and Indonesia respectively for 2015.
Duff & Phelps credited the continued momentum in Singapore mainly to sizeable merger & acquisition (M&A) transactions by the sovereign wealth funds (SWFs), GIC and Temasek Holdings, in consortium as well as stand-alone investments, complemented by other notable deals such as CMA CGM's acquisition of Neptune Orient Lines, Singapore Telecom's stake acquisition in Intouch Holdings and Qatar Investment Authority's acquisition of Asia Square Tower 1.
Singapore in fact experienced the second highest M&A deal value this year after the record hit in 2015, said the firm in its 2016 Transaction Trail report released on Tuesday (Dec 13). M&A deal volumes grew 16 per cent in 2016, while deal values declined by 18 per cent compared to the same period a year ago.
M&A also comprised the bulk of total deal volume with 684 deals valued at US$82.7 billion in 2016, compared to US$101.2 billion, US$50.7 billion and US$36.1 billion for 2015, 2014 and 2013 respectively.
Outbound deals continue to drive Singapore's M&A deal value. In 2016, there were 485 cross-border M&A deals in Singapore registering US$69.7 billion, with the bulk of total deal values coming from 318 outbound deals (Singapore-based companies or SWFs acquiring overseas companies) worth US$57 billion contributing to over 81.9 per cent of the total deal value for all cross-border deals. Domestic deals contributed to 15.8 per cent of the total M&A deal value with 199 deals valued at US$13.0 billion.
The largest contributor to M&A deal values in Singapore was the real estate sector at close to 30 per cent, overtaking the technology sector which was last year's leader, now moved to third place after the industrial sector.
There was also a significant pick-up in the Singapore market for initial public offerings. The year 2016 saw a total of 16 IPOs constituting US$1.9 billion raised on the Singapore Exchange, compared with 13 IPOs in 2015 raising US$450.7 million. However, this is still lower than the capital raised in the previous years before 2015. The largest IPO was Frasers Logistics & Industrial Trust, which raised approximately US$664 million.
The value of private equity and venture capital (PE/VC) deals in Singapore were the highest last year since 2012. PE/VC investments in Singapore companies have grown steadily in 2016 to US$3.5 billion compared to US$2.2 billion, US$2.4 billion and US$0.9 billion for 2015, 2014 and 2013 respectively.
Some notable deals were SoftBank Group's investment in GrabTaxi valued at US$750 million and BOC Aviation Pte Ltd by China Investment Corporation and other investors valued at US$572 million. Most of the notable deals were minority stake investments unlike the last few years, which saw more buyout transactions, said Duff & Phelps.
The region (Singapore, Malaysia and Indonesia) recorded a total deal value of US$111.8 billion spread across 1,308 transactions, said the firm. Globally, about 35,192 deals valued at over US$3 trillion were registered in the same period.
Looking ahead, Duff & Phelps said there are over 50 deals in the pipeline in the region with potential deal value of over US$16 billion. These include the proposed acquisition of InterOil Corp by Exxon Mobil Corp (potential deal value of US$2.5 billion), that of Singapore's Super Group Ltd by Jacobs Douwe Egberts BV (potential deal value of US$1 billion), as well as that of ARA Asset Management (potential deal value of US$688 million).
"We saw a record year of M&A deals in 2015 in the global market as well as in Singapore," said Duff & Phelps managing director Srividya Gopalakrishnan.
"Clearly, Asia has emerged as a strong player in the M&A arena, overtaking Europe, driven by large outbound acquisitions by China, Singapore and other Asian countries in their quest to increase their global footprint.
"The outlook for M&A deals going forward has two facets to it - what the statistics say and what the sentiments say. The statistics certainly indicate a good pipeline for deals, a continued focus on cross-border acquisitions, an increased share of Asia in the global deal values, cost of funds remaining relatively cheaper and the availability of huge amount of dry powder that can be deployed for buy-out deals or PE backed deals.
"However, the sentiments are rather negative at the moment. This stems from the effects of Brexit, an unusual US presidential election, the fundamentals of democracy revisited in several countries, slow recovery in the energy sector, several liquidations and bankruptcy situations in the marine, offshore and oil & gas sectors, and other uncertainties looming ahead. Adding to this are the increasing regulatory requirements and an unfavourable tax-planning environment.
"It will be interesting to see how deal making will shape up in 2017 and to what extent restructuring would contribute to the transactions landscape going forward, in our current times of uncertainty," concluded Ms Gopalakrishnan.