M&A activity fell 30.7% to $90.86b in 2018

This is the lowest annual period since 2013.

Singapore’s mergers & acquisitions (M&A) activity dropped 30.7% YoY to $90.86b (US$66.2b) in 2018, with the average closing deal sizes reaching $134.09m (US$97.7m), according to a report by Thomson Reuter’s financial and business risk arm Refinitiv.

In Q4, Singapore’s total deal activity fell 29.1% QoQ amounting to $17.02b (US$12.4b). YoY, deal activity crashed 58.5%, Refinitiv noted.

Total cross-border deal activity reached $49.55b (US$36.1b) which is a -44.2% YoY decline compared to $88.80b (US$64.7b). Inbound M&A activity fell 68.3% YoY in deal value to $17.84b (US$13b) whilst outbound M&A slipped 2.9% YoY, according to the report.

Also read: Singapore hits $145.74b worth of deals in 2018

“This is the lowest annual period since 2013 when deal value for inbound acquisitions in Singapore reached $6.18b (US$4.5b),” Refinitiv said. “The high technology accounted for 24.6% of Singapore’s inbound M&A activity and totaled $4.39b (US$3.2b) despite an -18.6% YoY decrease in value.”

The report pointed to how China’s electronic commerce firm Alibaba Group Holding planned to raise its interest in online retailer Lazada Southeast Asia for a total of $2.74b (US$2b) in a privately negotiated transaction.

“The deal pushed China as the most active acquiror in terms of deal value, capturing 32.5% of Singapore’s inbound activity,” Refinitiv explained. “US followed behind with 28.4% market share, whilst Japan represented 12.1% market share and saw the most number of inbound acquisitions in Singapore.”

For outbound M&A, deals reached $31.7b (US$23.1b) with the real estate industry as the most targeted sector. According to the report, the real estate industry captured 40.6% of Singapore’s outbound activity with $12.9b (US$9.4b) worth of deals amidst the -29.4% YoY decline in value.

Also read: Singapore M&A appetite remains steady at 40% amidst rising competition

Domestically, M&A activity dropped 37.7% YoY totaling $11.94b (US$8.7b) amidst the 3% increase in the number of domestic transactions, Refinitiv said. Real estate (43.8%), telecommunications (16%), financials (10.3%) and industrials (10.2%) sectors accounted for a combined 80.3% market share of Singapore’s domestic M&A deals.

In 2018, real estate led the sectors and accounted for 31% of the market share, coming in at $28.14b (US$20.5b). On the other hand, this was found to be a 53.9% YoY decline in terms of deal values.

“M&A targeting the high technology sector totaled $9.90b (US$7.21b), a 10.5% increase compared to last year at $8.92b (US$6.5b) and saw the highest annual period since 2014,” Refinitiv said in its report.

The materials sector captured 10.8% market share and totaled $9.84b (US$7.17b) which saw the highest annual volume in a decade after a 380.7% increase in value, the report stated.

Also read: Tech and real estate rev up Singapore M&A scene

“This was driven by Singaporean state-owned Temasek Holdings’ pending agreement to raise its stake to 4% in Bayer which is a German-based manufacturer of organic chemicals worth $5.08b (US$3.7b) in a privately negotiated transaction,” the firm noted in its report. “The deal is currently the biggest transaction involving Singapore so far this year and the second largest Singaporean deal on record targeting the materials sector.”

Meanwhile, private equity-backed M&A activity plummeted 61.1% YoY in deal value to $4.25b (US$3.1b), Refinitiv found. On the other hand, the number of private equity-backed deals rose 18.6% YoY, with the high technology sector accounting for 44.9% of market share with $1.92b (US$1.4b).