Singapore M&A deals in H1 see 16 % rise in volume but 35% fall in value

A GIC corporate logo seen at a staff conference in Singapore.
A GIC corporate logo seen at a staff conference in Singapore. PHOTO: BLOOMBERG

SINGAPORE - Singapore mergers and acquisitions (M&A) deal volumes grew 16 per cent in the first half of 2016 compared to the year-ago period, but total deal value fell by 35 per cent, according to a report by global valuation and corporate finance adviser Duff & Phelps.

The continued momentum in deal value was mainly due to sizeable M&A transactions by Singapore sovereign wealth fund GIC and state investment firm Temasek Holdings in consortium as well as in stand-alone investments, said the report released on Monday (July 4).

Other notable deals included CMA CGM's acquisition of Neptune Orient Lines Ltd, Qatar Investment Authority's acquisition of Asia Square Tower 1 and Alibaba Group's purchase of a stake in Lazada South East Asia Pte Ltd.

Outbound deals continued to dominate. Of the 260 cross-border M&A deals with a combined value of US$38.1 billion in the first half-year, 165 were outbound - Singapore-based companies or SWFs acquiring overseas firms - worth US$30 billion, making up 78 per cent of total deal value for cross border deals.

Domestic deals contributed to 6 per cent of total M&A deal value with 79 transactions valued at US$2.4 billion.

In terms of sectors, industrials were the largest contributor to M&A deal values in Singapore in the first half of 2016, overtaking last year's leader, technology, whch fell to fourth place.

Industrials accounted for about 30 per cent to total deal values, while the real estate sector contributed the most to deal volume, accounting for over 18.8 per cent from 63 deals. Based on M&A deal values, the top 3 sectors (industrials, real estate, and banking & financial services) accounted for 72.4 per cent of total deal values.

Said Duff & Phelps managing director Srividya Gopalakrishnan: "The first half of 2016 has given us mixed signals with slowing growth in the developing markets, modest growth in the mature markets, fear of interest rate hikes, possibilities of recession in certain economies, but at the same time witnessing a robust M&A and investment climate.

"While we have seen many sizeable global deals in H1 2016, not all of them may see the light of day as many are still pending regulatory and other approvals, especially after witnessing US$100 billion plus deals such as Pfizer's acquisition of Allergan getting cancelled due to regulatory issues.

"Also, while we see a significant interest from Asian and American companies to acquire UK and European assets during the first half of 2016, we cannot but wonder how the "new normal" Brexit situation will impact these going forward."