M&As set record in 2012, carry-over likely in 2013

M&As set record in 2012, carry-over likely in 2013

SINGAPORE - A record year for mergers and acquisitions (M&As) in Singapore in 2012 could flow into a robust 2013 as cross-border deals and privatisations continue to fill up pipelines, industry players said.

"2012 is a landmark year for the M&A market in Singapore," said Tan Kuan Ern, Credit Suisse's head of Singapore investment banking coverage.

"The M&A market has not been this active since 2001, when we saw a wave of consolidation in the local banking industry."

Announced M&A deals involving Singapore, including indirect acquisitions where the ultimate parent is based in Singapore, hit a record US$79.4 billion (S$96.8 billion) in 2012, up 83 per cent from 2011, preliminary data from Thomson Reuters showed.

In terms of direct acquisitions, domestic deals more than doubled to US$20 billion from US$8.7 billion in 2011.

As a percentage of total deal volume, all-Singapore transactions this year accounted for 30 per cent of the total, up from 26 per cent a year ago. Vikram Chakravarty, head of strategy and corporate finance Asia for AT Kearney, outlined three broad themes from a sectoral perspective.

First, acquirers looking for defensive investments settled on consumer and healthcare businesses where fragmentation offered a number of opportunities.

There were also "leveraged plays" in the insurance and banking industries, where high barriers of entry continued to drive demand for control of existing players.

Cyclical plays, such as coal and natural gas, also drew attention depending on an acquirer's point of view of the market.

Alvin Lim, head of Singapore advisory for HSBC, thinks those themes will largely continue into next year.

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