Asia M&A activity seen making comeback led by tech firms, conglomerates

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Asia-Pacific mergers and acquisitions are forecast by bankers to remain buoyant after surging 63% in the third quarter, driven by technology companies and conglomerates making strategic moves as they emerge from the pandemic.

Japanese companies are at the forefront of the M&A boom, as shown by SoftBank Group’s $40 billion sale announcement of chipmaker ARM to Nvidia and Nippon Telegraph and Telephone Corp’s (NTT)  launch this week of a $40 billion buyout of its wireless carrier business.

Deals involving Asia companies totalled $432 billion in the July-September quarter, the highest for the period in at least the past decade, according to Refinitiv data. They totalled $844 billion in the first nine months of the year, up 13% and compared to a 20% decrease globally for the period.

A strong outlook for M&A in Asia, with big markets such as China and Japan resuming domestic business activities, will please banks on hopes volume growth will help offset a slump in fees to seven-year lows as a result of COVID-19 disruptions.

“As the macro recovery takes hold, the first deals we expect to see are those which will help companies build or aggregate scale both in-market and across the region,” said Raghav Maliah, co-head of Asia ex-Japan M&A at Goldman Sachs.

Eight out of the region’s 10 largest deals were announced in the third quarter, including China’s giant oil & gas pipeline merger valued at $49 billion including debt.

The tech sector and tech-related businesses, many of which have experienced growth during the pandemic, are expected to primarily drive deal activities, bankers said.

India’s Reliance Industries has received over $10 billion in funding this year for its digital unit. It is in talks with more investors, including Abu Dhabi state fund Mubadala Investment Co, to fund its retail unit.

In China, a number of U.S.-listed tech companies including Sina Corp and Sogou Inc announced take-private plans, many with hopes of relisting in China’s own Nasdaq-like STAR market for higher valuations.

“Strategic activity will rebound driven by sectors experiencing strong recoveries from the COVID-19 pandemic, especially in technology, new-economy and private sector-oriented businesses,” said Goldman’s Maliah.

Deals involving Japanese companies surged more than five times in the third quarter from the second quarter to bring the total value this year to $198 billion. That was up 58% year-on-year.

“The domestic M&A market continues to be active as there are less barriers to engage and do due diligence on each other,” said Shinsuke Tsunoda, Nomura’s global head of M&A.

Morgan Stanley tops the region’s M&A league table in the first nine months, followed by Goldman Sachs and CICC.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.