5 Minutes, by Read more: * Asian first-half M&A hit a record $707.7 billion* Southeast Asia deals hit a record $124.8 billion* Private equity-backed deals hit a record $102 billion* Bankers expect de-spac transactions to materialize in the second half Reuters, HONG KONG/SINGAPORE, July 1 – As Southeast Asian and private-equity deals set records, Asian merger and acquisition activity rose to its second-highest level ever for a first half, and bankers expect the strong trend to continue for the remainder of the year. In January-June, announced acquisitions involving Asian corporations totaled $707.7 billion, up 75% from the same time a year ago and not far off the record of $758.6 billion set in the first half of 2018, according to Refinitiv data. Acquisitions in Southeast Asia increased by 83 percent to a record $124.8 billion, owing to blockbuster deals such as Grab’s $40 billion merger with Altimeter Growth Corp., a U.S. special-purpose acquisition company (SPAC). Southeast Asia is expected to remain a major focus for dealmaking, according to bankers. “You haven’t seen capex demand come through since the Southeast Asian region is still in the early stages of recovery,” said Amit Khattar, head of Deutsche Bank’s Asia Pacific investment bank. “But you will start to see this re-emerging alongside refinancing, consolidation, and M&A demand.” As corporations rethink office markets, he predicts M&A in digital infrastructure such as data centers, telecommunication towers, and the consumer sector, as well as real estate transactions, notably in Singapore. Other significant mergers in Southeast Asia included the $18 billion merger of Grab’s Indonesian rival Gojek with local e-commerce business Tokopedia, and a $15 billion combination of Axiata Group’s and Telenor’s operations in Malaysia. “We’re just halfway through the year, but assuming market conditions remain favorable and based on our backlog, we appear to be on track to break all records,” said David Biller, head of Citigroup’s Southeast Asia banking, capital markets, and consulting division. “The three main themes are still technology, consumer, and healthcare. Capital market and M&A transactions are widely dispersed throughout all countries.” Deals backed by private equity more than doubled to a new high of $102 billion. According to data provider Preqin, Asia-focused private equity firms raised $80.5 billion as of June 25, up 59 percent from a year earlier and the most in two years. In June, the region’s dry powder reached a new high of $384.9 billion. Banks’ improved lending appetite fueled PE acquisitions as many businesses across the area recovered from last year’s pandemic-induced slump. According to Dealogic data, acquisition-related finance in the region increased by 16 percent to $57 billion as of June 25. PE companies flocked to auctions of businesses held by the affluent American Sackler family, including Hong Kong-based mattress producer King Koil and the China unit of drugmaker Mundipharma. Another example is the sale of Reckitt Benckiser Group’s China baby formula business, which was won by Primavera Capital Group against a slew of competitors including Sequoia Capital, KKR, and Carlyle Group. “A primary focus remains on sponsor buysides and exits, with a particular focus on firms that have remained resilient throughout the COVID-19 epidemic,” said Rohit Satsangi, co-president of Asia M&A and head of Asia finance sponsors at Deutsche Bank. As regulators tightened control, SPAC-related transactions slowed, but bankers are optimistic that many discussions about so-called de-spac mergers, in which SPACs combine with target corporations, will result in transactions in the coming months. “Investor excitement over the development of disruptive and fast-growing firms in the new mobility, renewable energy, and technology sectors is a big factor driving de-SPAC and M&A activity,” said Rich Wong, Morgan Stanley’s Asia Pacific head of M&A. Morgan Stanley topped the M&A league table for announced deals in the region, followed by JPMorgan and Goldman Sachs. (Kane Wu in Hong Kong and Anshuman Daga in Singapore contributed reporting; Edwina Gibbs edited the piece.)/n
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