SINGAPORE - As the end of the second quarter approaches, the value of announced mergers & acquisitions (M&A) involving Singapore companies reached US$11.8 billion, a 10.4 per cent increase from the first quarter of 2017 despite a 16.3 per cent drop in number of announced deals, according to data from Thomson Reuters.
This brings overall Singapore M&A activity to US$22.4 billion, down 20.3 per cent compared to the first half of 2016, as number of deals fell 23.4 per cent.
This is the slowest first half period for Singapore deal making activity in terms of value since 2013, Thomson Reuters noted in a report released on Thusrday (June 15).
The average M&A deal size for disclosed deals dropped to US$89.8 million compared to US$93.6 million in the first half of 2016, as Singapore-involved M&A activity this year lacked deals US$3-billion and above compared to two deals during the same period last year which had a combined value of US$7.0 billion, said the report.
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Total cross-border deal activity amounted to US$13.7 billion, a 12.7 per cent decline over the same period last year (US$15.7 billion).
Domestic M&A activity also slowed down to US$3.8 billion, a 41 per cent decrease in deal value from first half of 2016, with number of domestic transactions down by 30.3 per cent. Real estate (68.3 per cent) and healthcare (11 per cent) sectors accounted for a combined 79.3 per cent market share of Singapore's domestic M&A activity.
Inbound M&A down 16.7 per cent in first half-year - lowest since 2013
Singapore's inbound M&A activity fell 16.7 per cent in deal value from over a year ago. Foreign acquisitions targeting Singapore-based companies reached US$5.6 billion so far this year. This is the lowest semiannual start since 2013 when deal value for inbound acquisitions in Singapore reached US$1.7 billion.
The industrials sector accounted for 42.3 per cent of Singapore's inbound M&A activity and totaled US$2.4 billion up 49 per cent from the first half of 2016. This was driven by China's HNA Holding Group's pending acquisition of CWT Ltd, a provider of integrated logistics solutions and management services, for US$1.3 billion (including net debt). Upon completion, CWT will be delisted from the Singapore Exchange.
That deal also pushed China as the most active acquiror in terms of deal value, capturing 30.8 per cent of Singapore's inbound activity. Hong Kong, Canada and the United States followed behind with 16.5 per cent, 16.4 per cent and 15.4 per cent market share, respectively.
Outbound M&A down 9.7 per cent
Singapore outbound M&A totaled US$8 billion so far this year, down 9.7 per cent in deal value compared to the first half of 2016, as number of outbound acquisitions also declined by 19.2 per cent.
The real estate industry is the most targeted sector thus far, capturing 54 per cent of Singapore's outbound activity, with US$4.3 billion worth of deals. This was driven by this year's biggest Singaporean M&A deal - Mapletree Investments' acquisition of the student housing portfolio of United States-based Kayne Anderson Capital Advisors, owned by Virtus Investment Partners Inc, for an estimated US$1.6 billion.
This bolstered the United States as the most targeted nation for Singaporean overseas deals so far this year in terms of value and number of deals. Singapore's overseas acquisitions in the United States reached US$3.6 billion so far this year, up 84.3 per cent in value and accounted for 45.3 per cent of the market share. China and India rounded out the top three most targeted nations with 13.7 per cent and 12.3 per cent market share, respectively.
Advisory fees for completed M&A deals up 184 per cent
According to Thomson Reuters, M&A advisory fees from completed transactions in Singapore totaled US$107.2 million so far this year, a 184.3 per cent increase from the comparative period in 2016.
Morgan Stanley took the lead in the fee rankings for completed M&A deals in Singapore with US$21.0 million in related fees, capturing 19.6 per cent wallet share so far this year. Credit Suisse and UBS followed behind with 17.4 per cent and 12.9 per cent share.