SINGAPORE - Mergers and acquisitions (M&A) activity within South-east Asia bucked the overall downtrend in the Asia-Pacific (Apac) ex-Japan region for the first half of this year, with Singapore recording US$17.1 billion (S$23.2 billion) in deals - a 154 per cent increase, or over 2.5 times the year-ago amount.
This is according to the latest data from Mergermarket released on Tuesday (July 2).
In particular, real estate behemoth CapitaLand's $11 billion acquisition of Ascendas-Singbridge from Temasek remains the largest deal in Apac ex-Japan for the first six months of 2019.
Overall, M&A activity in Apac ex-Japan slowed to levels unseen since 2013, amid an escalating US-China trade and technology war, the report said.
"The region generated 1,525 deals valued at US$241 billion in H1 2019, as its global market share shrank to 13.4 per cent from 18.6 per cent during the same period last year."
Following a disappointing first quarter, deal-making further decelerated in the second quarter this year, the report noted.
China and Hong Kong together accounted for a little more than half of the total regional deal value. China's deal value plunged 44.7 per cent, while Hong Kong posted a more modest 11.1 per cent decrease over the same period, mostly thanks to Hanergy Thin Film Power Group being taken private in a deal worth US$6.8 billion.
Meanwhile in South-east Asia, Indonesia recorded US$6.6 billion worth of deals representing an 88.6 per cent increase, and Malaysia posted US$3.7 billion, or a 16.4 per cent increase.
The Philippines also clocked in an M&A value to US$2.2 billion, a 398.2 per cent increase or almost five times previously, making it the fastest-growing Apac market. This was largely driven by the flagship Build, Build, Build (BBB) campaign of President Rodrigo Duterte, which is spurring consolidation among cement players, the report said. The largest deal in the country was San Miguel Corporation's acquisition of a 85.7 per cent stake in Holcim Philippines for US$1.85 billion.
Outbound activity plunged 25 per cent to US$41.2 billion across 192 deals, despite the US$10.2 billion takeover of US-based liquid petroleum products pipeline operator, Buckeye Partner, by Australia's institutional investment manager, IFM Investors.
By sectors, all industries posted a decrease in both value and volumes, with the exception of the consumer sector, which recorded a 7.6 per cent year on year increase in value to US$23.2 billion across 144 deals. Meanwhile, the technology sector fell by 66 per cent in value to US$22.9 billion across 174 deals.
Riccardo Ghia, research editor (Apac) at Mergermarket, noted that the tech war between the US and China is threatening to disrupt the supply chain, and create a "digital iron curtain" between countries using US technologies, and those that adopt Chinese ones.
According to the report, the outlook for private equity (PE) buyouts appears bleak, and is expected to worsen in the near future, as PE fundraising activity fell dramatically in China.
PE buyouts amounted to just US$28.8 billion across 160 deals in first half this year - a steep decline from 263 deals worth US$67.1 billion in the same period last year. The largest PE buyout deal was the acquisition of Australia's hospital operator Healthscope by Canada's Brookfield Asset Management for US$4.43 billion in February.
Private equity exits activity was also weak, recording 82 deals worth US$28.25 billion, compared to 129 deals valued at US$73.4 billion a year prior. However, the launch of a Nasdaq-style tech board on the Shanghai Stock Exchange in June could revive exit plans in the second half of the year for investment funds that invested in Chinese tech companies, the report said.