M&A in Asia-Pacific Predicted to Rebound in Q4 2020
Recovery is the trend, but could North Asia pull further ahead?
1 September 2020
The breadth of the COVID-19 crisis and the encompassing wave of lockdowns has created a mixed bag across APAC. As you’ll see in the newly published SS&C Intralinks Deal Flow Predictor for Q4 2020, we forecast a +6 percent YOY boost in announced M&A deals (range of +14 percent to 0 percent.) Compared to Q2 2020, early-stage M&A activity is already significantly up — and nearing Q3 2019 levels.
The types of deals we’ll see in APAC will vary. A continued recovery will depend on their outcomes. (For instance, an onslaught of distressed and restructuring deals could trigger a cautionary approach.)
Up to now, the pandemic hampered due diligence efforts across the board. Some territories are poised for better recovery, while increasingly making use of electronic communication tools to bridge the gap.
Deals intended to rebuild
In North Asia, we expect U.S. de-listings to come back to Hong Kong or China, with more privatization deals taking shape in the former. Both capital and private markets in South Asia will be driven by private equity (PE). Moratoriums and defaults will have lenders raising more funds to compensate. Japan will likely follow suit, making more deals to rebuild the domestic supply chain.
A recovery in stock prices and valuation levels has alleviated the challenge of valuation. Fundraising is driving momentum, with PE more actively looking at deals (especially those that have benefited from the lockdown —such as Tech and Pharmaceuticals.)
In Japan, the M&A deal flow is looking to be anywhere from flat to up slightly, compared to three months ago. However, some uncertainty remains for cross-border M&A.
There’s more trepidation in Australia/New Zealand, though. Increased provisions and clawbacks in purchase agreements have created more caution. Still, deals are coming out of hibernation — and dealmakers are slowly becoming more comfortable in valuing assets in this climate.
APAC has many of the same standout sectors as the rest of the world: Healthcare, Pharma and Core Technologies. The latter has been ignited by the extended USA-China trade war in North Asia. In South Asia, lenders have been fundraising in private and capital markets toward the more traditional Consumer Goods and Industrials. Materials remain the only sector not negatively impacted in the territory, but we anticipate flat growth there.
Find out more in the Q4 2020 edition of the SS&C Intralinks Deal Flow Predictor. Independently verified as a highly accurate six-month forecast of merger and acquisition (M&A) activity, the SS&C Intralinks Deal Flow Predictor is compiled by tracking early-stage M&A transactions globally that are in preparation or have begun due diligence.
Download your copy here.
Along with our forecast of M&A activity for the next six months, the latest issue of SS&C Intralinks Deal Flow Predictor includes:
- Spotlight feature: Are we in an epidemic of disputes? Read about the effects of COVID-19 on MAE/MAC clauses — and how to navigate them in a new M&A environment.
- An interview with Blair Nimmo, partner, UK Head of Restructuring and Global Head of Insolvency, at global accountancy and financial advisory firm KPMG, about the challenges his clients are facing, the role of technology in the age of remote work and his view on M&A, restructurings and insolvencies.
- An in-depth special report, Global M&A Catches Its Breath in an Uncertain Market, featuring regional spotlights using data provided by PitchBook.
Christophe joined Intralinks in 2019 as SVP – APAC Sales, overseeing 13 countries and the fastest-growing region of the business. Christophe’s mission is to lead the sales and marketing organization to a journey of innovation and continued growth to become the leading technology enabler for strategic transactions.
He brings to the team from prior roles two decades of experience in the technology and outsourcing sectors providing thought leadership and execution capability required for key large clients in their digital transformation programs.