M&A activity in Asia set to rise: analysts

M&A activity in Asia set to rise: analysts
By Stella Lee | Posted: 28 March 2011 2322 hrs

SINGAPORE : Mergers and acquisition (M&A) activity in Asia is set to increase with stronger investor confidence in the market, analysts said on Monday.

They said the outlook for mergers and acquisitions is looking healthy for 2011.

Bankers said the M&A deal volume is increasing due to the narrowing gap between the price buyers expect to pay and that sellers hope to receive.

Other factors include better market sentiment, easier access to bank financing and private equity funds waiting on the sidelines since the 2008 market crash for good buying opportunities.

Chang Tou Chen, head of global banking, South-East Asia, HSBC, said: "As the M&A pie grows, I would expect that more and more transactions will be completed out of stock deals or stock mergers.

"The drivers for Asia will be confidence and availability of liquidity. On both counts, our clients are very confident about the future."

According to Thomson Reuters, announced mergers and acquisitions in Asia excluding Japan rose nearly 10 percent in the first three months of 2011 to US$129 billion.

China, Australia and India made up nearly half of the deals in the first quarter.

"A lot of M&A activity that we work on are cross-border activity - that's where opportunities for scale and synergy exist," said Mr Chang.

And the rise in M&A activity is not confined to just large companies. Small and mid-tier companies are also consolidating or becoming acquisition targets for larger players.

Benjamin Ong, executive director, M&A, KPMG Corporate Finance, said: "SMEs and mid markets are actively exploring M&A in order to build better platforms for themselves to compete in the international marketplace."

While total M&A deal volumes increased for Asian emerging markets in the first three months of 2011, Asian developed markets saw a 17 percent drop compared with the same period in 2010.

Bankers expect commodities, energy and natural resources to witness vigorous M&A activity this year.

- CNA/al

- wong chee tat :)