Singapore still a preferred target for acquisitions

Companies in emerging markets continue to pick the island nation for acquisition deals but these have seen a marked decline.

According to KPMG’s latest Emerging Markets International Acquisition Tracker (EMIAT), Singapore, together with the United Kingdom (UK) and the United States of America (US), are the most popular targets for acquisitions by companies in emerging economies, 

However, the half-yearly tracker of cross-border Merger and Acquisition (M&A) deals has also revealed that such emerging-to-developed (E2D) acquisitions in Singapore has fallen some 17  per cent between the first and second half of 2011. E2D deals occur when trade buyers in emerging economies take at least a five percent shareholding in an overseas entity in a developed economy.

The number of these deals in Singapore faltered from 23 in the first six months of 2011 to 19 in the last six months of the same year.

While the US experienced a marginal fall in the number of E2D deals – from 47 to 45 – in the same time period, the number of deals involving emerging market acquirers of UK targets increased from 20 to 25 deals.

On the inversed developed-to-emerging (D2E) front when trade buyers from developed economies acquire shares in entities in emerging markets, Singapore has proven to be an avid investor, coming in third out of all the developed economies tracked. In the second half of 2011, Singapore recorded 75 such deals, the highest for the country since 2005. This figure also represents a significant 27 percent increase compared to the first six months of the same year, when Singapore’s tally came up to 59 D2E deals.

Commenting on the findings, Ms Diana Koh, Head of Singapore Private Equity and Transaction Services, KPMG in Singapore, said that interest in Singapore entities by buyers in emerging economies are still at healthy levels.

“While the number of E2D deals in Singapore has dropped, the number we are seeing is still an increase from 2009 and 2010. As one of the leading financial hubs in the region, I believe Singapore will attract more investers from emerging markets as the global economy recovers,” said Ms Koh.