m&a market briefing - southeast asia and india...2 | m&a market briefing - southeast asia...
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M&A Market Briefing - Southeast Asia July 2019 | 1
Election season has swept much of Asia this year, with vast populations going to the polls in India, Indonesia, and much of Southeast Asia. For some investors, this has meant time seated on the sidelines of dealmaking until results, and prospective leadership changes, were announced. However, even amid these uncertainties, M&A and PE/VC investment on the whole maintained much of its momentum in the first half of 2019. In markets where it has slowed, investors may now be tempted to ramp up dealmaking as the political and regulatory direction of these markets becomes clearer.
Across Southeast Asia, investors wary of stagnated deal flow in a political year may be at ease given the US$34.9bn in deals announced in H1 2019, well on track to match FY 2018’s US$57.8bn. Foreign capital, too, may be embracing these
results, with international investors contributing US$13.6bn to deal totals in H1 2019, well aligned with the US$22bn in FY 2018 and other years prior.
In India, M&A was off to a sluggish start in H1 2019 with US$33.5bn ahead of general elections in April-May. However, this is compared to deal flow following a blockbuster year in 2018 where US$102bn in transactions came to market. A fairer comparison for the half-year’s totals would be to 2014, another election year on the subcontinent, when US$39.9bn in deals were made for the full year. Yet, even with the elections behind it, questionable global economic conditions and fiscal uncertainties related to exchange rate volatility could pose negatives to dealmaking.
M&A totals (H1 2019)
Southeast Asia
Deal value
US$34.9bnDeal volume
162
Southeast Asia and India M&A (H1 2019)
Value (% increase/decrease from H1 2018)
Volume (% increase/decrease from H1 2018)
VietnamUS$1.4bn 15 deals ↓8% ↓38% Philippines
US$2.2bn 8 deals ↑398% ↓43%
MalaysiaUS$3.8bn 24 deals ↑23% ↓45%Singapore
US$17.2bn 58 deals ↑156% ↓2%
ThailandUS$3.1bn 23 deals
↓65% ↓30%
IndiaUS$33.5bn 180 deals ↓53% ↓23%
IndonesiaUS$7bn 28 deals↑102% ↑4%
Southeast Asia M&A: Target geographies (H1 2019)
IndonesiaSingapore Malaysia Thailand Philippines Vietnam Myanmar Cambodia
0% 20% 40% 60% 80% 100%
Dealvolume
Dealvalue 20% 11% 9% 7% 4%49%
36% 17% 15% 14% 5% 10% 2%1%
M&A Market Briefing - Southeast Asia and India
JULY 2019
2 | M&A Market Briefing - Southeast Asia July 2019
Record India M&A values set in 2018 may be difficult to surpass, however, with stability in government, an uptick in dealmaking in H2 2019 and forthcoming years is likely. Foreign inbound M&A is expected to continue assuming continuity of governance with
participation from historic investors (US, UK and Japan) and new entrants (China), according to Mergermarket intelligence.
Emerging Southeast Asia continues to be a promising investment destination for foreign capital. Chinese investors, in
particular, have shown interest in recent years as they face rising barriers in more developed markets. Provided political stability, foreign inbound M&A will be a prominent theme as Chinese buyers compete with other active dealmakers from Japan and the US.
India M&A: Domestic and foreign inbound
Southeast Asia M&A: Target geographies
Deal
val
ue (U
S$m
)
Singapore
Malaysia
Indonesia
Philippines
Thailand
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
H1 2019201820172016201520142013
Southeast Asia M&A
Foreign inbound deal totals
H1 2019
US$13.6bn78 deals
FY 2018
US$ 22bn200 deals
Foreign inbound M&A (H1 2019)
Deal valueBidder regions for India (H1 2019)
Bidder regions for Southeast Asia (H1 2019)
Deal volume
Deal value Deal volume
49% 22% 7% 19%
1%
1%
2%
North America
19% 41% 20% 20%
Europe 11% 8% 26% 27%
North Asia
Australasia
Southeast AsiaAfrica
8%9%8%
Japan
46%13% 16% 32%Middle East
3%
Domestic values Inbound values Domestic volume Inbound volume
Dea
l val
ue (U
S$m
)D
eal volume
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
0
50
100
150
200
250
H1 2019201820172016201520142013
India M&A
Foreign inbound deal totals
H1 2019
US$15.1bn90 deals
FY 2018
US$ 46bn224 deals
M&A Market Briefing - Southeast Asia July 2019 | 3
The financial services opportunity is a standout theme in both India and Southeast Asia as these economies transform from largely cash-based to transactions-driven and mobile payments. Recent trends have seen consolidations among key banking players and investment from foreign capital. M&A in Indonesia, in particular, has trended up since 2016, with growing interest from Japanese and South Korean investors.
Dealmaking in India’s TMT sector has also flourished, driven by interest in e-payment and e-commerce targets. As the country’s digital economy expands, these deals and others involving fintech will become mainstays of the deal space, featuring acquisitions by tech giants from China, Japan and the US as they enter or expand in the market.
Target sectors (H1 2019)
Agriculture
Construction
Real Estate
Pharma, Medical & Biotech
Leisure
Transport
Consumer
Technology
Business Services
Energy, Mining & Utilities
Industrials & Chemicals
Financial Services
0% 5% 10% 15% 20% 25% 30%0%5%10%15%20%25%30%35%40%
Deal volumeDeal value Deal volumeDeal value
29% 14%
36% 9%
16% 14%
12% 10%
10% 9%
8% 6%
4% 12%
4% 5%
3% 11%
3%
2% 5%
1% 4%
1% 2%
14%
27% 16%
12% 7%
11% 13%
6% 18%
5% 10%
4% 6%
3% 3%
3% 7%
2% <1%
<1%
<1%
2%
1%
Southeast Asia India
Deal
val
ue (U
S$m
)
Indonesia
Malaysia
Philippines
Singapore
Thailand
$0
$2,000
$4,000
$6,000
$8,000
$10,000
H1 2019201820172016201520142013
Southeast Asia M&A: Financial Services
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
H1 2019201820172016201520142013
Deal
val
ue (U
S$m
)
Consumer Financial ServicesIndustrials & Chemicals TMT
India M&A: Target sectors
Deal
val
ue (U
S$m
)
Indonesia
Malaysia
Philippines
Singapore
Thailand
$0
$2,000
$4,000
$6,000
$8,000
H1 2019201820172016201520142013
Southeast Asia M&A: TMT
4 | M&A Market Briefing - Southeast Asia July 2019
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Program Ad Exponent Exchange A5.indd 1 7/9/19 8:34 AM
PE/VC growth momentum in India reached record investment levels in 2018 and already H1 2019 totals have surpassed those of H1 2018. As with M&A, continued stability following the recent general election could prove enticing for foreign investment from pension funds and super funds, according to Mergermarket intelligence.
In Southeast Asia, PE/VC investment has trended down after a record year in 2017, one led by significant buyout activity. Despite a noticeable year-on-year decline, 2018 delivered strong totals nonetheless and H1 2019 lags the same period the year prior by a nominal difference.
Southeast Asia and India PE/VC investment trends
Southeast Asia: PE Investment PE Buyout VC Investment
India: PE Investment PE Buyout VC Investment
US
$m
$0
$5,000
$10,000
$15,000
$20,000
$25,000
H1 2019201820172016201520142013
India PE/VC investment half-year comparison
H1 2018 H1 2019
465 investments worth
US$16.8bn
246 investments worth
US$28.6bn
Southeast Asia PE/VC investment half-year comparison
H1 2018 H1 2019
161 investments worth
US$7bn
257 investments worth
US$5.7bn