S'pore firms on global buying spree; value of deals doubles

Companies in Singapore announced around US$91 billion (S$125.6 billion) of overseas deals this year to September more than double the US$41.9 billion of transactions for the same period last year.
Companies in Singapore announced around US$91 billion (S$125.6 billion) of overseas deals this year to September more than double the US$41.9 billion of transactions for the same period last year.PHOTO: ST FILE

Singapore Inc is stirring, with companies from real estate to engineering becoming bolder in their hunt for acquisitions abroad.

Companies in the city state announced around US$91 billion (S$125.6 billion) of overseas deals this year to September, more than double the US$41.9 billion of transactions for the same period last year, data compiled by Bloomberg shows.

Temasek Holdings and GIC loom large but increasingly, others are inking their biggest transactions to put Singapore on the world stage.

The flurry of activity shows a determination by firms to adopt a more aggressive stance amid an escalating trade war between China - one of Singapore's closest neighbours - and the United States.

An economy that is forecast to expand next year at the slowest pace since 2016 is also putting pressure on companies to look further afield for growth.

''We're certainly seeing a desire among Singapore Inc companies to globalise,'' said Mr David Biller, Citigroup Inc's head of corporate and investment banking for the Asean region. ''Many next-generation leadership teams in these organisations are helmed by executives with multinational experience and they bring a focus on cross-border growth.''

  • $125.6b

    Value of overseas deals by Singapore firms this year through September.

    $57.8b

    Value of transactions for the same period in 2017, according to data compiled by Bloomberg.

Citigroup is advising Singapore Technologies Engineering on a US$630 million deal - the company's biggest - to buy an aircraft engine components group from General Electric.

CapitaLand is in the process of acquiring a portfolio of multifamily properties in the US for US$835 million in what is its largest overseas transaction since 2010, while Singapore Press Holdings last month purchased student accommodation in Britain for $321 million, its biggest foray abroad.

On Wednesday, Mapletree Investments also said it acquired a 16.5 million sq ft logistics portfolio for US$1.1 billion from Prologis. The assets are in distribution centres within major logistics markets such as Chicago, Dallas and Seattle in the US, as well as France, Germany and Poland.

 
 
 

It is not only the total value of deals that is increasing. Singapore firms were involved in 468 transactions as buyers of foreign companies this year to September, an increase of 7.8 per cent from the same period last year. Globally, mergers and acquisitions activity rose 2 per cent.

''Achieving organic growth in a relatively small market like Singapore is difficult, and building capabilities and scale will be increasingly important for corporates to stay relevant globally,'' said Mr Pankaj Goel, the co-head of South-east Asia investment banking and capital markets at Credit Suisse Group.

China, and the expansion opportunities it presents, is proving a strong lure, according to Oriano Lizza, a sales trader at CMC Markets. ''Many Chinese companies have too much leverage and are selling off assets to strengthen their balance sheet,'' Mr Lizza said. ''Being familiar with the region, Singapore companies are coming in and many do cutprice offers.''

Firms from Singapore have been involved in 68 acquisitions of Chinese companies so far this year. The volume of transactions jumped from US$3.8 billion in the same period last year to US$19.5 billion, Bloomberg-compiled data shows.

By far the biggest investment in a Chinese company that involved a Singapore one was the US$14 billion capital injection in Chinese entrepreneur Jack Ma's Ant Financial. The financing, announced in June, included a US dollar tranche part-backed by Temasek and GIC.

''The Singapore Government has been encouraging companies for years to expand abroad to develop the country's profile,'' said CMC's Mr Lizza. ''GIC and Temasek have been at the forefront of it.''

Temasek spokesman Stephen Forshaw said the group's portfolio companies were independently managed and ''Temasek doesn't direct their business decisions''.

'' Of course, over many years, some of these companies have grown organically into regional and global businesses, and in cases, acquisitions have naturally followed,'' he said.

BLOOMBERG

  • With additional reporting from The Straits Times
A version of this article appeared in the print edition of The Straits Times on October 05, 2018, with the headline 'S'pore firms on global buying spree; value of deals doubles'. Print Edition | Subscribe