The value of announced M&A deals involving Asia Pacific companies, excluding Japan, totaled US$112.7 billion so far this year, a 22.1% increase compared to a slow start during the first quarter of 2013 (US$92.3 billion), according to preliminary data from Thomson Reuters. This is the strongest start to a year for the region since 2011 when volume reached US$151.8 billion.
The average M&A deal value for disclosed deals grew to US$98.3 million compared to US$57.8 million in the first quarter of 2013, as deal-making so far this year involving Asia Pacific companies witnessed at least two transactions worth above US$5-billion compared to none during the first quarter of 2013.
Completed M&A activity involving Asia Pacific amounted to US$55.0 billion thus far, a 48.5% decline from the first quarter of 2013 (US$106.7 billion) and the lowest first quarter-level in terms of deal value since 2009 (US$45.4 billion). Number of completed deals involving Asia Pacific, excluding Japan, fell 46.3% to 848 deals.
Among the sub-regions of Asia Pacific, overall M&A activity involving Southeast Asia saw the biggest growth with 90.9% increase to US$24.7 billion compared to the first quarter of 2013. Australasia-involvement followed next with 48.9% rise in deal value to US$18.2 billion. North Asia, which accounted for a significant portion of Asian involvement M&A, grew 11.3% to US$75.8 billion from the same period in 2013. Only South Asia-involvement M&A activity declined 31.2% to US$3.7 billion from first quarter of 2013.
China Remains Most Targeted Nation
M&A transactions targeting Asia Pacific grew 30.3% to US$97.0 billion from US$74.4 billion during the first quarter of 2013. Chinese companies continued to be the preferred target by both domestic and foreign acquirors with US$39.1 billion, a 7.2% increase compared to the first quarter of 2013, and captured 40.4% of Asia Pacific-target M&A activity.
Belgium is currently the most active non-Asian acquiror of Asian companies in terms of deal value with US$6.8 billion worth of transactions from two deals. Meanwhile, United States had the most number of announced deals among the non-Asian acquirers with 59 transactions worth US$4.1 billion, a 35.8% decline in deal value from first quarter of 2013.
Real Estate Sector Takes the Lead
The Real Estate sector made up the largest portion of the acquisitions involving Asia Pacific companies with US$26.1 billion in deal value, a 175.8% increase from the first quarter of 2013 and captured 23.2% of the M&A activity. This is the strongest start to a year for the Real Estate sector involving the region driven by Greenland Holdings’ plans to list on the Shanghai Stock Exchange through a reverse merger (valued at US$10.6 billion) with Shanghai Jinfeng Investments.
Energy & Power sector followed next with 17.6% market share worth US$17.2 billion in deal value, up 24.7% from the first quarter of 2013. This is driven by a significant increase in Oil & Gas acquisitions that amounted to US$11.8 billion to date, a 43.2% growth from first quarter of 2013, and the strongest start to a year since first quarter of 2011 (US$27.1 billion).
Deal-making activity in the TMT sector (Technology, Media, and Telecommunications) totaled US$17.0 billion, a 65.2% increase in deal value with a combined market share of 15.1%.
Private Equity-backed M&A Witness 48% Growth from 1Q 2013
Buyside Financial Sponsor M&A activity in Asia Pacific reached US$9.4 billion so far this year, a 47.7% increase from the first quarter of 2013 (US$6.4 billion), and the strongest start to a year in terms of value since first quarter of 2011 (US$9.8 billion). The deal value is driven by an investor consortium’s pending agreement to invest up to US$2.4 billion in Singapore-listed Global Logistic Property Ltd and its subsidiary.
The investor group --- including Bank of China Group Investment Ltd of Hong Kong, Hopu Investments Management Co Ltd, and an undisclosed Chinese insurer --- agreed to acquire a 34% stake in Iowa China Offshore Holdings (Hong Kong) Ltd, a provider of logistic services, and a wholly-owned unit of Global Logistic Properties Ltd of Singapore for an estimated CNY14.303 billion or US$ 2.358 billion, in a privately negotiated transaction. In addition, the consortium will invest US$163 million through buying new shares in GLP's listed entity.