SINGAPORE: Appetite for making deals and raising funds in Singapore and the larger Southeast Asia region may improve later this year or next as companies review their portfolios and seek acquisitions to close strategic gaps, according to bankers and financial advisors.
PwC, one of the Big Four consulting firms, said in its mid-year review that upcoming mergers and acquisitions (M&A) activity might not be flashy megadeals, given recession fears and rising rates. of interest, but smaller deals that could also drive transformation and growth.
“While cash-rich companies remain well positioned to make bigger moves, we see mid-market transactions dominating the market in the coming months,” he said.
“The flow of agreements could open in the second half of the year.”
Morgan Stanley said the healthcare, technology and energy sectors will lead activities, adding that the record amount of uninvested capital in private equity funds could help fuel more M&A later this year despite choppy markets. debt financing.
Martin Siah, president of Bank of America in Singapore, told The Straits Times that the bank’s outlook for the second half of 2023 remains cautious, even as it sees pockets of opportunity.
Investment-grade debt capital markets are likely to remain active, he added.
He said: “Given the long-term nature of our business and our advisory relationship with clients, we are laying the groundwork with many of our clients on potential capital markets and M&A opportunities.
“As the markets head into calmer waters, we will be able to start executing trades in, say, early 2024.”
The banker added: “Continued market uncertainty or lack of direction could result in slow decision-making, leading to lower transaction volumes.”
Mergers and acquisitions and capital market activity should increase as the macroeconomic clouds begin to lift and companies have greater clarity about the actions of the central bank and the global economy, he said.
The second half of 2023 will see strong activity in sectors that have been more defensive.
“Healthcare and infrastructure are highlighted, and we are running various processes and are involved in transactions that will be announced in due course,” Siah said.
Market consolidation will be a “centerpiece” of the strategic dialogue, given challenging financial markets, particularly in technology and early-stage companies.
Bank of America Securities beat investment banking fees generated in the first half of 2023 in Singapore and Southeast Asia.
It captured a larger market share of 9.2% in Singapore and nearly 7% in Southeast Asia.
The latest performance was the result of several years of collaboration with clients, leading to the successful execution of transactions in a challenging market environment, he said.
Within the capital markets, the main transactions the bank was involved in included the S$800 million rights issue of Sats; DBS Bank’s S$1.2 billion bond, which is Singapore’s largest debt capital so far in 2023, as well as Merdeka Battery Materials’ S$620 million initial public offering in Indonesia.
Bank of America had advised on most sovereign bond issuances for the Philippine and Indonesian governments, as well as the $1.5 billion bond for Malaysia’s Khazanah sovereign wealth fund and the $500 million bond for ST Engineering.
In the M&A segment, the bank was the exclusive financial advisor for the strategic review of SingPost.
His role was to enhance shareholder returns and ensure that SingPost had the proper valuation in the Singapore market.
He was the exclusive financial advisor to Shell in the latter’s sale of a 35% stake in Abadi LNG to Pertamina of Indonesia and Petronas of Malaysia for $650 million.
The bank was also an advisor to Sats in the purchase of Worldwide Flight Services, as well as to the sovereign wealth fund GIC in its transactions with Store Capital Reit and Indus Realty Trust. — The Times of the Strait/ANN
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