Each quarter BDO analyse global mid-market deal activity across a number of major regions and selected sectors around the world; we offer you a satellite view of how the M&A market is evolving and where it appears to be heading. For better overview and comparison, we segmentate the deal activities into sectors including Technology Media and Telecom, Industrial Chemistry, Business and Financial Services.
BDO horizon records and analyses the statistics scoping deal activities, volume and values across the globe. It provides the data for over a decade of market changes and movements. Analysis on this data provides statistical source for future predictions and forecasts. It also includes expert commentary on recent trends, overview of recent activities and highlights the most significant and important activities across 17 geographical areas throughout the world.
Our heat chart highlights the most active sectors for transactions deemed useful for companies and personnel trying to understand global market activities. Whether you are active on the buy or sell side or just alert to the latest opportunities, Horizons will provide you with invaluable insights into where and why investment is flowing, giving you more of the mid-market knowledge and insight you need.
In the last issue of 2022, which covers to the third quarter of the year, our global and regional analysis continues seeing M&A practitioners busy, but global deal activity has gone down to pre-COVID-19 levels. The COVID-19 pandemic results in a gradual increase in M&A deal activities in South East Asia starting from Q2 2020 till Q3 2021 in which it peaked with 106 deals. After the peak, it dropped steadily over the course of a year to 57 deals in Q3 2022. The 35% drop from 87 deals to 57 deals between Q2 and Q3 2022 is deemed to be a sharp drop. The deal activities are returning to the steady movement of pre COVID eras.
The significance of private equity related deals in M&A activities in Southeast Asia has been growing since the end of 2022. It reached its highest level since 2008 in 2021. In Q3 2021 alone PE was involved in 32deals valuing close to 3.3 billion in US Dollars. PE related activities saw a gradual downfall in 2022 in together with the fall in total deal volume. In contrasts to last year’s same quarter, Q3 2022 has significantly low volume of PE related activities. It only constitutes up to 11 deals valuing 0.8 billion.
Technology, Media and Telecom sectors are the current top contributor to M&A deals in Southeast Asia. Industrial & Chemical sector follows in second place with nearly half in gap. The rapid increasement in deal volume of TMT sector in SE Asia started in Q1 2021. By Q3 2021, it surpassed previous highest volume sector, Industrial & Chemical, and became the top sector of the region.
Looking at the top 20 deals in SE Asia, Singaporean companies were the most popular target for M&A transactions, accounting for an average of 35% of the top 20 deals for each of last 4 quarters. The country is recording the region’s highest deal count in the last five quarters. This may be due to the availability of value accretive companies in Singapore, which are proving attractive to investors. The acquisition of Princeton Digital Group in Singapore by Warburg Pincus LLC, the Ontario Teachers' Pension Plan and the Mubadala Investment Company PJSC from the United Arab Emirates with purchase consideration of 500 million is the top single deal in SE Asia for last year.
Over the past 2 years, more than 50% of the buyers involved in the top 20 deals have been foreign buyers except for the Q3 of 2022 which fell to 30%. Among the buyers out of SE Asian countries buyers from United Arab Emirates can be seen most significantly in top deals of last 4 quarters.
- Business Services – the acquisition of the Princeton Digital Group in Singapore by Warburg Pincus LLC, the Ontario Teachers' Pension Plan and the Mubadala Investment Company PJSC from the United Arab Emirates for a purchase consideration of USD 500m in Q2 2022;
- TMT: The acquisition of a 100% stake in Globe Telecom in the Philippines by MIESCOR Infrastructure Development Corp based in the Philippines for a purchase consideration of USD 473m in Q3 2022 and;
- Energy, Mining & Utilities: The acquisition of a 100% stake in PTT Mining Ltd in Singapore by Indonesian mining infrastructure company PT Astrindo Nusantara Infrastruktur TBK for a purchase consideration of USD 471m in Q3 2022.
The total value of top 20 deals for each quarter represents large majority of the total deal value in that quarter. As SE Asia continue to record higher average deal values, it is indicative that market trend in the region is moving toward bigger-sized deals.
After a strong year for M&A activities in 2021 with total value of 27 billion setting a highest record since 2014, the M&A activities in SE Asia faced a number of headwinds in the first 3 quarters of 2022. Many countries around the world started tightening their monetary policies in accordance with soaring inflationary pressure in 2022. The uncertainty of Russo-Ukrainian conflict which caused the unpredictable increment in food and energy prices also contribute to the tightening of monetary policies. As for the result of such environment, the decisions for M&A transactions in SE Asian are likely to be increasing challenging for the remainder of the year.
Going into the next quarters, the M&A activities in SE Asia will still largely dependent on factors such as the on-going management of COVID 19 in the region, geopolitical tensions surrounding the Russo-Ukrainian conflict, the global inflationary pressure and rising interest rates, the continuing distribution of global supply chain. Nevertheless, countries throughout South East Asia will continue to represent attractive investment destinations due to their strategic location and population growth.