Mon, Dec 16, 2019

Duff & Phelps Publishes Transaction Trail Annual Report 2019

Singapore – Duff & Phelps, the global advisor that protects, restores and maximizes value for clients, today released key findings from its Transaction Trail Annual Report 2019. The report takes an in-depth look at transaction and capital markets activities, including mergers and acquisitions (M&A), private equity (PE) and venture capital (VC) investments as well as initial public offerings (IPOs), in Singapore, Malaysia and Indonesia (“Region”) over the course of 2019.1 

In 2019, the Region recorded total deal value at about US$100 billion spread across 1,300 deals, with 10 M&A transactions and three PE/VC investments valued at more than US$1 billion each. Globally, more than 39,000 deals valued at over US$3 trillion were registered in the same period.2

Deal activity lower but overall healthy levels remain, with values over US$100 billion from M&A, PE/VC investments and IPOs in Singapore, Malaysia and Indonesia.

  • The total value of M&A, PE/VC investments and initial public offerings (IPOs) in Singapore, Malaysia and Indonesia was about US$100 billion in 2019, lower compared to 2018 (at US$136 billion), led by outbound acquisitions. IPOs in the region raised over US$3 billion in 2019, representing an increase of approximately 90% compared to 2018.
  • The real estate sector in Singapore exceeded US$22 billion in total deal value, marked by notable M&A deals and several sizable privatization deals involving real estate companies and real estate investment trusts (REITs).
  • Regional PE/VC investments remained fairly active in 2019, with 278 PE/VC investments in the region accounting for approximately US$9.5 billion in deal value.

Singapore Continues to Lead Deal Making in the Region

Singapore recorded a total of 809 transactions (M&A, PE/VC and IPOs) worth US$81.2 billion for 2019 as compared to 857 transactions worth US$106.2 billion for 2018. M&A comprised the bulk of the deal volume in Singapore, constituting of 630 deals valued at US$72 billion in 2019, compared to 688 deals valued at US$99 billion in 2018.  

M&A deal values continued to be driven by sizeable outbound M&A transactions by sovereign wealth funds (SWFs) in consortium investments, such as the acquisitions of Ultimate Software Group Inc. and Genesee & Wyoming Inc. for US$11 billion and US$8.4 billion, respectively. In addition, domestic M&A deals in Singapore increased by over 90% to US$18.9 billion over the prior year, driven by sizeable deals involving real estate companies and REITs during the period. Privatization and consolidations have been the key themes impacting the larger transactions this year.

Real Estate Sector the Main Driver of Singapore’s M&A Deal Value in 2019

In 2019, there were a total of 442 cross-border M&A deals in Singapore registering US$53.5 billion. The bulk of total deal value came from 291 outbound transactions (Singapore-based companies or SWFs acquiring overseas companies) worth US$47.5 billion, contributing to about 66% of the total M&A deal value in 2019. Domestic transactions contributed to 26% of total M&A deal value with 188 deals valued at US$18.9 billion in 2019.

The largest contributor to M&A deal values in Singapore was the real estate sector which has overtaken the banking, financial services and insurance (BFSI) sector, previously the top sector in 2018. Real estate contributed the most to M&A transactions, accounting for 32% of the deal values and 20% of the deal volume in Singapore with a total of 125 deals. Based on M&A deal values, the top three sectors (real estate, technology and industrials) accounted for 72% of the total.

New Record for Transacted Volume of PE/VC Investments in Singapore in 2019 

PE/VC investments into Singapore companies continue to set record high levels of deal volume with 166 PE/VC investments in 2019, an increase over the 154 investments in 2018 and a dramatic growth over the recent years from 47 deals in 2014. Total PE/VC investments in Singapore accounted for US$6.5 billion in deal value for 2019, edging slightly lower than 2018 at US$6.6 billion. 

Technology Sector Remains the Key Driver of PE/VC Deals in the Region

Over the past five years, the technology sector has been one of the largest contributors to PE/VC deals in the region. PE/VC investments into technology companies for 2019 retained its top sector ranking, accounting for 44% of total deal value, followed by the healthcare and real estate sectors at 18% and 16%, respectively. Top deals in the technology sector included the US$420 million investment in Traveloka Holding Ltd by GIC and other consortium investors, and the US$226 million investment in Zilingo Pte Ltd lead by Sequoia Capital and other consortium investors, along with six other PE/VC investments into technology companies with deal values exceeding or equal to US$100 million.

Singapore IPO Market Rebounds in 2019

IPO performance in Singapore witnessed a significant recovery in capital raised in 2019 at US$2.3 billion, about four times the amount raised in 2018, driven by the listings of several large REITs on the Singapore Exchange (SGX). Notable REIT listings on the SGX for 2019 included Prime US REIT, Eagle Hospitality Trust and Lendlease Global Commercial REIT.

Decline for M&A Activity Across Indonesia and Malaysia in 2019 

M&A deal values in Indonesia declined significantly for 2019, registering US$7.2 billion in deal value, down from the record high of US$15.1 billion in 2018; in line with the slowdown witnessed in deal activity with transaction volume decreasing from 130 M&A deals in 2018 to 94 M&A deals in 2019. Malaysia experienced a similar broad decline in deal activity for 2019 with M&A, PE/VC and IPO valued at US$10.7 billion in 2019 compared with deal values at US$12.5 billion in 2018. Notable M&A deals for Indonesia and Malaysia included the acquisition of Murphy Oil Corp’s Malaysia Oil & Gas assets for US$2.1 billion by PTT Exploration and Production PCL, and MUFG Bank’s acquisition of a further 54% stake in PT Bank Danamon Indonesia Tbk for US$3.5 billion.

“In spite of the decline in deal values this year from the historic highs in 2017 and 2018, we continue to see healthy levels of transaction activity in the region. As we have been tracking transactions in the region over the last eight years, we note that the reported transaction values in M&A, PE/VC investments and IPOs have grown from US$70 billion in 2013 to record levels of US$136 billion in 2018 and stabilizing at about US$100 billion this year. Among the key trends that have emerged over the years—the most prominent change has been the Region’s increased ability to attract significant PE/VC investments, led by the technology sector,” said Srividya Gopal, Managing Director, Duff & Phelps.“Going forward, we seem to be at the crossroads—gazing at trade wars, political uncertainty and volatility globally on one side, and increased technology adoption, availability of capital and resources and positive demographic changes in the Southeast Asian economies on the other. Based on these considerations, we can continue to expect robust activity, which may come with significant disruptions and more changes to the landscape, in the near future,” Gopalakrishnan concluded. 

About Duff & Phelps
Duff & Phelps is the global advisor that protects, restores and maximizes value for clients in the areas of valuation, corporate finance, investigations, disputes, cyber security, compliance and regulatory matters, and other governance-related issues. We work with clients across diverse sectors, mitigating risk to assets, operations and people. With Duff & Phelps, a division of Duff & Phelps since 2018, our firm has nearly 3,500 professionals in 28 countries around the world.
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M&A advisory, capital raising and secondary market advisory services in the United States are provided by Duff & Phelps Securities, LLC. Member FINRA/SIPC. Pagemill Partners is a Division of Duff & Phelps Securities, LLC. M&A advisory and capital raising services in Canada are provided by Duff & Phelps Securities Canada Ltd., a registered Exempt Market Dealer. M&A advisory, capital raising and secondary market advisory services in the United Kingdom and across Europe are provided by Duff & Phelps Securities Ltd. (DPSL), which is authorized and regulated by the Financial Conduct Authority. In Germany M&A advisory and capital raising services are also provided by Duff & Phelps GmbH, which is a Tied Agent of DPSL. Valuation Advisory Services in India are provided by Duff & Phelps India Private Limited under a category 1 merchant banker license issued by the Securities and Exchange Board of India

Download the report.

1 December 2018 to November 2019
2 Source: Bloomberg (December 2018 to November 2019) 

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