The FINANCIAL — Mergers and acquisitions (M&A) activity involving Asia-Pacific companies was robust in the first half of 2015, as companies continue to leverage the region as a growth driver. With deals worth US$561.8b announced during the period, the region recorded the highest deal value in over a decade and an increase of 55% against the same period last year. This record high result is despite a 9% decrease in deal volume from 6,159 deals in H1 2014 to 5,621 deals, according to EY.
John Hope, Asia-Pacific Transaction Advisory Services Leader at EY, says:
“Following an incredibly strong 2014, the first half of 2015 continues to be very good for M&A globally. In Asia-Pacific, we are seeing an increase in deal value across almost all sectors. Companies, however, are not doing deals for deal’s sake. The decrease in the deal volume suggests a high level of discipline in selecting the right deals.”
M&A activities involving companies from Mainland China led the region in terms of value, recording 1,393 deals worth US$247.6b, representing an 88% year-on-year increase. This includes inbound activities worth US$25b, or a 211% increase against the same period last year. In terms of deal volume, Japan tops the chart with 1,500 deals worth US$79.4b. Other active markets were Australia (688 deals worth US$54.1b), India (645 deals worth US$27.8b), South Korea (572 deals worth US$66.3b) and Hong Kong (281 deals worth US$97.8b).
Technology tops all sectors in M&A deals and value
In the first 6 months of 2015, technology was the most active sector both in terms of deal volume and deal value. The sector recorded 1,562 deals worth US$89.6b, representing 18% and 90% year-on-year increases, respectively. The professional services sector ranked second in terms of deal volume, witnessing 522 deals worth US$19.9b. The financial services sector took the third spot in terms of deal volume, witnessing 368 deals worth US$46.6b. The majority of transactions took place in the investment companies and banking sub-sector, which shows that Asian markets remain attractive to the growth strategies of most of the domestic and foreign banks.
Apart from acquisitions, companies also look to improve portfolio performance and shareholder returns through divestments. According to EY’s Global Corporate Divestment Study 2015, nearly two-thirds of executives in Asia-Pacific (60%) expect the number of strategic sellers to increase in 2015. This suggests that there will be plenty of available assets for those that are ready to transact.
“M&A deal activity is expected to strengthen in the coming months, specifically for countries such as Mainland China, Australia, South Korea and Singapore, which are aided by favorable government policies,” concludes Hope. “Other moves in the region, such as the ASEAN Economic Community’s plans to create an integrated economy among 10 member countries, will also encourage M&A activities for the rest of the year and beyond, as companies look to establish or expand their presence to seize business opportunities.”