Global appetite for M&A to increase over next 12 months: KPMG

SINGAPORE - Despite recent market turbulence, analysts expect the world's largest businesses to show more appetite for mergers and acquisitions (M&A) and an increasing capacity to fund deals over the next 12 months, accounting and consulting giant KPMG said in a new report.

Globally, the predicted forward price-to-earnings (P/E) ratio - a measure of corporate appetite - is expected to increase by 11 per cent between June 2015 and June 2016, the firm said.

The capacity to fund transactions, measured by forecast net debt to earnings before interest, tax, depreciation and amortisation (Ebitda), is expected to improve 7 percent over the same period.

"This encouraging data has yet to be completely reflected in actual transaction levels. Both completed deal volumes and completed deal values fell between January and June 2015," KPMG noted.

However, Singapore bucks the trend with an expected drop in appetite.

Of the five Asean nations that KPMG analysed, only Singapore registered an expected 2 per cent fall in appetite over the next year.

In terms of the capacity to transact however, Singapore performed well above the global average, with an expected increase of 22 per cent in capacity to fund deals.

Mr Benjamin Ong, the head of mergers & acquisitions at KPMG in Singapore, said: "Despite the recent volatility in stock markets and tensions in the global economy, Singapore remains an attractive platform for foreign investors looking to expand into Southeast Asia. We expect deal activity to pick up when volatility eases."