Deals in S’pore rise 30% on mergers: Report

SINGAPORE — The Republic has recorded a 30 per cent jump in deals, which totalled US$55.4 billion (S$72.8 billion) this year, fuelled by a surge in mergers and acquisitions (M&A), with a strong deal pipeline expected next year, a report released yesterday showed.

The robust outlook for deals was driven by investors looking to use M&A to boost their market positions as consolidation across industries gathers pace, said the report by consultancy firm American Appraisal.

There were a total of 416 deals here from M&A, private equity deals and initial public offerings this year, it said.

The share of overall deals from M&A rose during the year to 60 per cent from 40 per cent, with the total value of such deals rising to US$50.7 billion from US$36 billion. The real estate sector was the key driver for M&A deals in Singapore, American Appraisal noted.

Private equity deals more than doubled to US$2.4 billion this year. But the initial public offering market had a lacklustre performance, with total capital raised plunging by close to 60 per cent.

Singapore sovereign wealth fund GIC and investment giant Temasek Holdings contributed significantly to the M&A market performance, with both accounting for five of the top eight deals this year.

The biggest deal was led by a consortium of investors, including GIC acquiring United States-based IndCor Properties for US$8.1 billion, followed by Temasek buying a 25 per cent stake in AS Watsons Holdings for US$5.67 billion.

“We have seen sovereign-wealth funds being extremely acquisitive and doing a lot of transactions this year (both buying and selling) and a substantial part of the investment has been channelled into asset-based industries,” noted Ms Srividya Gopalakrishnan, managing director of American Appraisal Singapore.

“Singapore is among the countries leading the charge, with its M&A and private equity deals having seen the highest half-yearly value in the second half of 2014 over the past three years,” she added.

The deal momentum in the Republic’s M&A market is expected to continue beyond this year, the report said.

On the other hand, the IPO market turned in a disappointing performance this year, despite an uptick in the second half of the year, with listings such as Accordia Golf Trust, IREIT Global and Frasers Hospitality Trust.

The value of IPOs declined sharply to US$2.27 billion from US$5.47 billion, while the number of deals fell to 23 from 26.

The key reasons for the drop in the market were the reduced investor appetite for traditional offerings such as real estate and the high-base effect due to the large number of listings a year earlier, said Ms Gopalakrishnan.

In the near term, Singapore is likely to see more deals clinched across the capital markets.

“Singapore is increasingly becoming a key investment hub, where global companies are trying to ... make Singapore the intellectual capital of South-east Asia and use it as a platform to invest in other countries in Asia,” said Ms Gopalakrishnan.