Singapore M&A deals shrink 22.4% to $14.7b in Q1 amid Covid-19 outbreak: Mergermarket

Deal count was also down 30 per cent to 21 deals, compared with 30 deals in 2019. ST PHOTO: KELVIN CHNG

Updated

Published

Apr 06, 2020, 01:34 PM

SINGAPORE (THE BUSINESS TIMES) - Singapore's mergers and acquisitions (M&A) activity have slowed sharply as the coronavirus outbreak brought disruption and turmoil to business and financial markets.

The value of such deals tumbled 22.4 per cent to US$10.2 billion (S$14.7 billion)in the first quarter of 2020 from US$13.1 billion for the year-ago period, according to data from deal intelligence service Mergermarket as at April 1.

Deal count was also down 30 per cent to 21 transactions, compared with 30 in 2019. The hit to Singapore's M&A market is in line with the regional and global downtrend observed for the quarter.

Among the top Singapore M&A deals in the quarter by deal value was CapitaLand Commercial Trust's and CapitaLand Mall Trust's proposed $8.27 billion merger via a cash and stock deal - which was also the second-largest in deal value in the Asia-Pacific for Q1.

Overall, M&A activity in the Asia-Pacific excluding Japan generated US$103.2 billion across 616 deals in the first quarter. This was 32 per cent lower year on year in deal value and the lowest quarterly value since Q1 2013.

Dealmaking has ground to a halt due to the coronavirus outbreak which started in China and later spread to Japan and South Korea.

China and Hong Kong were the most significant contributors to M&A activity in the region and the first to be impacted by Covid-19. Their combined deal value in the first quarter plunged 35.8 per cent year on year to US$51.3 billion, while volume dropped 32.5 per cent to 268 transactions in the same period.

"The coronavirus crisis might create M&A opportunities for dealmakers in the coming months as cash-starved Chinese companies seek to weather the storm," Mergermarket said in its report.

That said, companies at the moment are vying for emergency loans, but equity injections are also to be expected, it added.

Private equity buyout dealmaking in the first quarter fell 54.2 per cent in deal value to US$9.4 billion across 74 deals. This is the smallest quarterly deal value since the fourth quarter of 2013.

Private equity exits in Q1 generated only US$4.8 billion across 27 deals, down 72.2 per cent from US$17.3 billion spanning 41 deals a year ago.

Globally, M&A activity fell 39.1 per cent in deal value to US$563.7 billion across 3,685 transactions after nearly a decade of growth, comparable to the overall value and number of deals seen in Q1 2008 amid the global financial crisis.