Southeast Asian companies are speeding up their global ambitions, with
takeover deals at record volumes and more than double the pace of last year.
Buoyed by strong growth and
robust balance sheets, Southeast Asian companies are aggressively pursuing
energy, financial and retail firms worldwide.
A trend that took off five years
ago has accelerated as the European debt crisis has made many assets cheaper,
and marks a change from the traditional strategy of expanding by grabbing more
market share at home.
“Southeast Asian companies are
seeing more opportunities now,” says Paul Strecker, Hong Kong-based head of the
Asia merger-and-acquisition group at law firm Shearman & Sterling. “You
have some blue-chip assets divested by European and U.S. companies that are a
lower valuation than in the past, given the impact of the crisis.”
While overall Asia deal volume
remains almost flat, cross-border acquisitions announced by companies in the
Southeast Asian region reached a record $26.2 billion in the year to date,
excluding purchases by the region’s sovereign-wealth funds. That is more than
double the $10.9 billion this time last year, and compares with $23.2 billion
in all of 2011, according to data provider Dealogic.
It is unclear whether the
region’s largest cross-border deal, Singapore’s DBS Group Holdings Ltd.’s $7.3
billion bid for Indonesia’s PT Bank Danamon Indonesia, will go through because
of the Indonesian government’s review of bank-ownership rules.
But other large deals are well
under way, including Malaysia’s state-owned Petroliam Nasional Bhd.’s $5.3
billion acquisition of Canada’s Progress Energy Resources and Thailand’s
state-owned PTT Exploration & Production’s $1.9 billion bid for U.K.-based
Cove Energy PLC, which focuses on oil-and-gas exploration in Mozambique.
And the purchase this year of the
Asian equities franchise of Royal Bank of Scotland—for the modest sum of $142
million—gave Malaysian bank CIMB Group Holdings business in equities research,
sales and trading throughout the region.
As the region’s economies mature,
industry-leading companies are running out of growth prospects both in their
home countries and in the region, and are needing to go farther afield,
according to Mr. Strecker. PTT, for instance, has embarked on exploration and
production projects in about a dozen countries as Thailand’s energy consumption
rapidly increases.
To a certain extent, Southeast
Asian companies also are playing catch-up on acquisitions after years of
watching more-active nations, including China, Japan and India, go abroad. And
bankers expect the activity to continue.
“Southeast Asian companies have
reached a level of maturity where they’re ready to export their capabilities in
a big way and see this as the time to consolidate their position in other
markets,” says Keith Magnus, head of UBS Investment Banking in Singapore and
Malaysia.
Kathy Chu
Business & Investment Opportunities
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