Southeast Asia and private equity deals fuel Asian M&A boom Reuters

Authors: Kane Wu and Anshuman Daga

Hong Kong/Singapore (Reuters)-As Southeast Asia and private equity transactions hit record highs, Asian M&A activity surged to the second highest level in history in the first half of the year, and bankers expect strong momentum in the second half of the year. year.

According to Refinitiv’s data, the value of transactions involving Asian companies announced from January to June was US$707.7 billion, a year-on-year increase of 75%, not far from the US$758.6 billion recorded in the first half of 2018.

Transactions in Southeast Asia increased by 83% to a record $124.8 billion, including a blockbuster deal involving the merger of ride-hailing giant Grab with U.S. special purpose acquisition company (SPAC) Altimeter Growth Corp for $40 billion.

Bankers expect Southeast Asia will remain the focus of transactions.

Investment director Amit Khattar said: “You still haven’t seen the emergence of capital expenditure demand, because Southeast Asia is still in the early stages of recovery, but with refinancing, integration and mergers and acquisitions needs, you will start to see this demand reappear.” Bank, Asia Pacific, in Deutsche Bank (From:).

As the company reassesss the office market, he anticipates mergers and acquisitions of digital infrastructure such as data centers, telecommunications towers and consumer sectors, as well as real estate transactions, especially in Singapore.

Other major transactions in Southeast Asia include the merger of Grab’s Indonesian rival Gojek with local e-commerce company Tokopedia for US$18 billion, and the US$15 billion merger of the divisions of Malaysian telecommunications company Axiata Group and Norway’s Telenor.

“We are only halfway through this year, but if market conditions remain constructive and based on our backlog of orders, we look likely to break all records,” said David Biller, the principal. Citigroup (NYSE:) Southeast Asian banking, capital markets and consulting services.

“The themes are still technology, consumers and healthcare. Capital markets and M&A transactions are very extensive in all countries.”

Private equity-backed transactions more than doubled, reaching a record $102 billion.

According to data from data provider Preqin, as of June 25, private equity funds focused on Asia have raised US$80.5 billion, an increase of 59% year-on-year, the most in two years. The area’s dry powder reached a new high of USD 384.9 billion in June.

As many companies in the region rebounded from the downturn caused by the pandemic last year, improved banks’ willingness to lend has also boosted private equity transactions.

According to Dealogic’s data, as of June 25, financing related to acquisitions in the region increased by 16% to 57 billion U.S. dollars.

Private equity firms are flocking to auction assets, such as Hong Kong-based mattress maker King Koil and the Chinese subsidiary of drug maker Mundipharma, which is owned by the Sackler family of US billionaires.

Reckitt Benckiser Group’s sale of China’s infant formula business is another example. Chunhua Capital Group has defeated many competitors including Sequoia Capital, KKR and KKR. Carlyle Group (Nasdaq:).

Rohit Satsangi, Deutsche Bank Asia M&A Co-Head and Head of Asian Finance Promoter, said: “The main focus is still on sponsor buyers and exits, especially for companies that have remained resilient throughout the COVID-19 pandemic.”

As regulators strengthen supervision, SPAC-related transactions have slowed down, but bankers hope that when SPAC merges with the target company, many discussions about so-called de-spac transactions will lead to transactions in the coming months.

“An important factor driving de-SPAC and M&A activities is investor optimism about disruptive and fast-growing companies in new mobility, renewable energy and technology,” said Rich Wong. Morgan Stanley (NYSE:) Head of M&A in Asia Pacific.

Morgan Stanley tops the M&A rankings of announced deals in the region, followed by JPMorgan Chase (NYSE:) and Goldman Sachs (NYSE:).