Asia-Pacific M&A Activity Remains Dynamic After A Strong Start to the Year

Mergers and acquisitions (M&A) deal flow across Asia Pacific (APAC) include several hotspots, bringing record highs in strong regions like Australia, New Zealand (ANZ) and Southeast Asia, with a hot IPO market in North Asia (especially Hong Kong) as companies take advantage of special purpose acquisition companies (SPAC) listings in the U.S. and China.

However, some areas are showing slower recovery. The COVID-19 crisis, which hampered cross-border deals in Japan, has been escalating. We forecast a slower May/June for dealmaking due to a relapse of COVID interruptions and a lack of adequate pipelines. The South Korean market had a quick COVID-19 recovery, and ample dry powder will continue that trend. 

These are just some of the trends outlined in the latest edition of the Q3 2021 SS&C Intralinks Deal Flow Predictor, just out. In the report, you can see the effect of market drivers on new deals throughout Asia Pacific and the rest of the world.

For example, post-COVID-19 economic recovery in areas like ANZ has helped increase demand from buy-side players with private equity (PE) firms heavy with dry powder. While businesses in Japan are carving out assets, North Asia is focusing on IPOs. In South Asia, capital markets have been a strong driver for clients to explore retail funding. In Southeast Asia, though, low valuations are causing advisors to manage both sell and buyer expectations. (Travel to clients in this area is still dulled by pandemic travel restrictions.)

In South Korea, large corporations are rapidly shedding non-core business and beefing up their cores or future growth engines through M&A. Cash-abundant PEFs are also aggressively looking for targets and trying to exit current portfolios at the same time. 

Rising price tags

Valuations in APAC are high across many industries such as travel and commercial real estate.  Valuations are more on the “reasonable” side of the spectrum in South Korea as bidders take advantage of the market more cautiously.

Sectors to watch here have been mostly financial and industrial (in ANZ) and TMT in Japan and North Asia. Energy and Pharma are strong in North and South Asia and Korea, while Energy is one of the strong sectors in Southeast Asia.

Many regions are still sticking to remote work, and keeping onsite visits limited. North Asia and South Korea have begun more normal practices such as in-office work.

However, the mood overall is cautious optimism with positivity and momentum being most dominant across APAC.

Find out more in the Q3 2021 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.

The issue includes a spotlight on the future of SPACs and an interview with Jeff White, partner at Skyview Capital, on the competition against SPACs for assets by PE in today’s market — and what effect the pandemic has had on the category as a whole.