SOUTH EAST ASIA M&A

REGIONAL REPORT 2014

In association with:

SOUTH EAST ASIA M&A REGIONAL REPORT 2014

SOUTH-EAST ASIA M&A HITS NEW HIGH

SOUTH-EAST ASIA DEFIED BOUTS OF POLITICAL INSTABILITY IN PARTS OF THE REGION DURING 2014 TO POST A RECORD YEAR FOR
M&A ACTIVITY AS A SURGE OF OUT-BOUND DEALS POWERED DEAL-MAKING TO RECORD LEVELS. M&A INVOLVING SOUTH-EAST ASIAN
ACQUIRERS OR TARGETS SURGED 68% TO US$140BN BETWEEN JANUARY 1 AND NOVEMBER 30, BEATING THE PREVIOUS RECORD OF
US$132BN SET IN 2007. BANKERS BELIEVE THE LEVELS ARE SUSTAINABLE.

Were seeing M&A activity exceeding pre-crisis levels, but

the big difference is that pre-crisis, South-East Asia M&A
was largely about Singapore, and now its much more
broad-based, said Eugene Gong, head of M&A for South
East Asia at Deutsche Bank.
Singapore reinforced its long-held status as the regions
most acquisitive country, but there was also a sharp rise in
activity in Malaysia, where big-ticket banking consolidation
produced the regions biggest deal. The banner year for
M&A was driven by a surge in out-bound transactions, as
domestic companies sought growth overseas and high
valuations across the region kept a lid on in-bound activity.
Weve seen a transformation in the mix of M&A
in comparison with previous years, with out-bound
transactions forming a much more significant part of deal
activity. A big part of this is driven by sovereign wealth
funds looking to invest all over the world and that is a sign
of greater confidence about the global environment, said
Gong.
Acquisitive corporates were also supported by the same
favourable financing markets that have proved such a
compelling driver of M&A activity across Europe and the

TOP 20 ASEAN M&A DEALS 2014YTD*

Target

Acquiror

US, contributing to US$3.3trn of global activity the first

time since 2007 that volumes have breached US$3trn.
But the out-bound boom is not yet being matched by
unfettered domestic M&A, fuelling hopes that 2015 could
see even greater activity. Political instability and elections
in Indonesia, Thailand and Philippines put the brakes on
activity in those countries. We except to see more broadbased activity in 2015 when countries such as Indonesia and
Thailand should become more active, said Alvin Lim, head of
banking for South-East Asia at HSBC. Bankers expect activity
during 2015 across a range of sectors including financial
institutions, consumer and retail and real estate as companies
expand beyond their home markets.

SINGAPORE SWING
Singapore was at the vanguard of the surge in overseas
deal-making, with both corporates and the countrys
sovereign wealth funds making significant acquisitions.
Singapores real estate sector returned to the M&A fray,
making it the most dominant industry group for deals
across the region accounting for 24% of total deal-flow.

Value Target

Acquiror

(US$bn) Advisors

Advisors

Target

Nation

Acquiror

Nation

CIMB Group Hlds

Malaysia

RHB Capital

Malaysia

16.233

CIMB, JPM

Barclays, RHB, CS, GS

AS Watson Holdings

Hong Kong

Mayon Investments

Singapore

5.672

BofAML, GS, HSBC, DBS

Wing Hang Bank

Hong Kong

OCBC Pearl

Singapore

4.847

GS, KPMG, Nomura, UBS,

BofAML, JPM

Citigroup, Somerley

Frasers Centrepoint

DBS Bank, MS,

Singapore

Shareholders

Singapore

4.399

United Overseas Bank

Australand Property Grp

Macquarie Capital Group,

Australia

Frasers Centrepoint

Singapore

3.389

DB, StanChart

Fort Street Advisers

Perennial Real Estate Hlds

China

St James Holdings

Singapore

2.782

DBS Bank, StanChart

CapitaMalls Asia

Singapore

Sound Investment Holdings Singapore

2.542

DB

CS, MS

Iowa China Offshore Hlds

China

Investor Group

Hong Kong

2.358

Citigroup

Malaysia Building Society

Malaysia

CIMB Islamic Bank

Malaysia

2.328

Citigroup

CIMB, JPM, CS,

Barclays, RHB

Shah Deniz project

Azerbaijan

BofAML

CSR PLC

JPM, GS

Deutsche Bank

Tudor Pickering

PETRONAS

Malaysia

2.250

United Kingdom Qualcomm Global Trading

Singapore

2.213

Murphy Oil Corp-Oil & Gas

Malaysia

Indonesia

2.000

New Britain Palm Oil

Papua N Guinea Sime Darby Plantation

Malaysia

1.985

RHB Investment Bank

Citigroup, Maybank

Goodman Fielder

Australia

Investor Group

Singapore

1.777

CS, Grant Samuel

BofAML, UBS Invest Bank

Hemaraj Land & Dev

Thailand

WHA

Thailand

1.728

STATS ChipPAC

Singapore

Jiangsu Changjiang

China

1.714

Citigroup

DB, CICC

PT Pertamina Malaysia

Electronics Technology

BR Properties logistic assets Brazil

LPP Empreendimentos

Brazil

1.178

BTG Pactual

Citigroup

Goodpack

IBC Capital

United States

1.114

Rippledot Capital Advisers,

MS, CS, GS

Singapore

DB, Provenance Capital

AG Trust

Singapore

Accordia Golf Co

Japan

1.103

SMBC Nikko, Daiwa,

Mizuho

United Envirotech

Rothschild

Singapore

CKM (Cayman) Co

Cayman Islands

1.056

Stirling Coleman

*Jan 1 to Nov 27 2014

Source: Thomson Reuters

In association with Merrill Datasite December 2014

SOUTH EAST ASIA M&A REGIONAL REPORT 2014

Real estate has long been a staple of the countrys deal-making, although
recently it has taken the form of the sale of individual asset sales. In 2014,
corporate M&A rebounded, as sovereign wealth funds, family-owned
businesses and corporates looked for attractive yield opportunities, with
Australia a particular hotspot. Real estate is close to the heart of many
family-led groups in Singapore and they have the confidence, expertise and
opportunism to pursue transactions both domestically and cross-border, said
Ralf Pilarczyk, head of ASEAN M&A at Standard Chartered Bank in Singapore.
Singaporean real estate company Frasers Centrepoint paid US$2.4bn
for Australand Property a Sydney-based real estate development firm.
Singapore and Chinese real estate markets dont move in synch but there
are hints of softness in both, so they are looking to other geographies
where they have a subscale presence, said one banker in the region. There
was also a steady flow of domestic real estate deals. For example, Sound
Investment Holdings, a unit of CapitaLand Ltd, Southeast Asias biggest
developer, offered to buy the rest of its mall unit for about S$3.06 billion
(US$2.4bn) to consolidate some businesses and boost returns.
One of the stand-out features of the Singaporean merger landscape
was a return to big-ticket deal-making by the countrys sovereign wealth
funds, which include EPF, GIC and Temasek, all of which have earmarked
significant funds to invest in assets across industry sectors from retail to
real estate. While the sovereign wealth funds favour stake-building over
full-blown acquisitions, their acquisitive behaviour displays a confidence
that has been lacking in previous years.
After spending much of 2013 selling down non-core stakes in a series of
block trades, Temasek moved back to the front foot, making one of its biggest
foreign bets, with the purchase of a stake in Hong Kong tycoon Li Ka-Shings

retail flagship. Temasek spent US$5.7bn on a 25% stake in Watson Co,

which owns Superdrug in the U.K. and the ParknShop supermarket chain.
Meanwhile, in September, GIC bought a stake in UK roadside assistance
company RAC from private equity owner Carlyle Partners.
SWFs bring unique capital to the table. There are not many
investors who can write US$1bn cheques for minority positions in
unlisted companies, said one Singapore-based banker. The acquisitive
international outlook by SWFs is not confined to Singapore. Malaysias
biggest state-run pension fund the Employees Provident Fund whose

ASEAN M&A: FINANCIAL SPONSOR INVOLVEMENT*

ASEAN OUTBOUND M&A

VALUE US$bn

NO OF DEALS

ASEAN M&A
VALUE US$bn

NO OF DEALS

150

3,000

120

90
2,500
60

30

2,000
2011

2012

2013

2014 YTD*

* Year-on-year like-for-like comparisons Jan 1 to Nov 27 2014

Source: Thomson Reuters

VALUE US$bn

25

200

60

20

190

50

NO OF DEALS
800

700
15

180

10

170

40
600

30
20
160

150

0
2011

2012

2013

2014 YTD*

500
10
0
2011

150

400
2012

2013

* Year-on-year like-for-like comparisons Jan 1 to Nov 27 2014

* Year-on-year like-for-like comparisons Jan 1 to Nov 27 2014

Source: Thomson Reuters

Source: Thomson Reuters

ASEAN INBOUND M&A

2014 YTD*

DOMESTIC ASEAN M&A

VALUE US$bn

NO OF DEALS

50

800

VALUE US$bn

NO OF DEALS
2,000

60
50

40
700

40

30
1,500

30
20
600
10

20
10

500
2011

2012

2013

2014 YTD*

1,000
2011

2012

2013

* Year-on-year like-for-like comparisons Jan 1 to Nov 27 2014

* Year-on-year like-for-like comparisons Jan 1 to Nov 27 2014

Source: Thomson Reuters

Source: Thomson Reuters

December 2014 In association with Merrill Datasite

2014 YTD*

SOUTH EAST ASIA M&A REGIONAL REPORT 2014

interests include Londons Battersea Power Station is on

the hunt for infrastructure assets such as a stake in the
UKs Associated British Ports.
Meanwhile Malaysia Airports Holdings, which is 36.6%
owned by another Malaysian fund, Khazanah Nasional,
bought the 40% stake that it doesnt already own in
Turkeys second-largest airport, Istanbul Sabiha Gokcen,
for US$362m. Bankers say South East Asian funds will look
increasingly to acquire infrastructure assets in Australia
after the country launched a massive privatisation
programme.
There are a number of infrastructure-related assets for
sale in the telecoms sector. In October, after a three-month
tender process, Indonesian mobile telecom operator PT
XL Axiata agreed to sell 3,500 communication towers
to telecom infrastructure firm PT Solusi Tunas Pratama
for us$460m. The sale comes as telecom operators in
Indonesia seek to cover the cost of growth by selling or
spinning off assets like communication towers.

RETAIL THERAPY
Meanwhile, Retail and consumer sectors were active as
companies put excess cash to work on acquisitions, either
in the region or overseas as they looked to diversify their
revenues and develop new markets, reflecting an ambition
on the part of South-East Asian companies to increase
their influence the global economy. Notable transactions
included Singapore agribusiness Wilmar and First Pacifics
bid for Australian food company Goodman Fielder.
Meanwhile, in the Philippines Universal Robina bought
New Zealands Griffins foods.
In consumer and retail there are very significant
valuation differentials between Asia and Australia/New

ASEAN M&A BY INDUSTRY SECTOR

2014 YTD*
Target industry sector
Real Estate; Mortgage Bankers and Brokers

32,158.7

Commercial Banks, Bank Holding Companies

22,188.7

Food and Kindred Products

9,622.3

Oil and Gas; Petroleum Refining

9,132.6

Transportation and Shipping (except air)

8,925.1

OUT-BOUND APPETITE
A lack of reasonably-priced assets at home is driving
South-east Asian companies to look overseas. In Thailand,
CP Group is on the hunt for deals while in the Philippines,
JG, Delmonte and San Miguel are looking to diversify by
region.
Meanwhile, foreign multinationals are once again
looking at South-East Asia as improving confidence over
the global economy and a surge in deal-making in the US
and Europe has put growth by M&A back on the agenda.
We are seeing evidence of large multinational companies
seizing opportunities to deploy marginal capital here,
rather than in the Eurozone, said Tom Willett, global head
of M&A at Standard Chartered.
In November, French utilities giant GDF Suez (via its
subsidiary Cofely South East Asia) acquired Keppel FMO,
a facilities management company in Asia, while Mondelez
International, the maker of Oreo cookies and Ritz crackers,
agreed to buy a majority stake in Vietnams Kinh Do
Corps snack business for US$370m as the US foods group
bolstered its presence in fast-growing emerging markets.
With companies wanting greater exposure to the regions
growing consumption, the focus is on healthcare, retail
and consumer so we expect M&A activity to continue
across these sectors says Deutsche Banks Gong.

ASEAN M&A BY INDUSTRY SECTOR

Full-year 2013
Target industry sector

Value (US$m)

Other** 8,647.6

Real Estate; Mortgage Bankers and Brokers

Miscellaneous Retail Trade

6,323.2

Commercial Banks, Bank Holding Companies

Investment & Commodity Firms/Dealers/Exch.

15,790.1

5,445.3

Other* 9,533.0

10,049.8

Business Services

4,611.4

Electric, Gas, and Water Distribution

Electronic and Electrical Equipment

4,378.3

Food and Kindred Products

Hotels and Casinos

3,945.4

Investment & Commodity Firms/Dealers/Exch.

6,092.6

Oil and Gas; Petroleum Refining

6,063.0

Retail Trade-Food Stores

5,983.9

Chemicals and Allied Products

Electric, Gas, and Water Distribution

3,783.1
3,092.0

9,189.1
6,488.7

Mining 3,085.4

Hotels and Casinos

4,047.1

Telecommunications 2,689.0

Business Services

3,555.1

Credit Institutions

2,615.5

Insurance 2,430.5

Prepackaged Software

2,099.4

Transportation and Shipping (except air)

1,966.4

Air Transportation and Shipping

1,284.8

Health Services

1,800.1

Amusement and Recreation Services

1,250.5

Drugs 1,798.6

Insurance 1,226.2

Metal and Metal Products

Retail Trade-Food Stores

1,187.5

Mining 1,692.1

1,116.2

Telecommunications 1,253.4

Public Administration
Transportation Equipment
*Jan 1 to Nov 27 2014

Value (US$m)

Zealand so M&A can be very financially accretive, said a

banker. In May Philippines drinks group Emperador moved
even further afield with the acquisition of United Spirits
Whyte & Mackay whisky business.
A mismatch between the expectations of buyers and
sellers held back further activity in the sector, as familyrun businesses opted to hold onto their businesses, while
buyers baulked at what they saw as excessive valuations.
This affected transactions from foreign buyers looking at
the region, which has been a feature of the M&A market in
recent years. But thats starting to change and promises to
be a theme for 2015.

1,094.4

1,777.8

Miscellaneous Retail Trade

1,092.4

Air Transportation and Shipping

1,091.8

*Aggregate of individual sector activity sub-US$1bn

*Aggregate of individual sector activity sub-US$1bn

Source: Thomson Reuters

Source: Thomson Reuters

In association with Merrill Datasite December 2014

SOUTH EAST ASIA M&A REGIONAL REPORT 2014

BIG IN FIG
The regions financial services sector produced a glut of
deals with Malaysia leading the way in big-ticket banking
consolidation. The country accounted for the regions
biggest deal of the year when in October, Malaysian banks
CIMB, RHB Capital and Malaysia Building Society agreed
a three-way merger valued at M$72.5bn that creates
the nations largest bank by assets, highlighting a trend
toward fewer, bigger lenders in Malaysia. The deal helped
boost FIG M&A activity in South-East Asia to US$30bn
from US$17bn in 2013. Right now, banking M&A in SouthEast Asia is increasingly a domestic consolidation play,
especially in markets where the industry is fragmented,
said Standard Chartereds Pilarczyk. Bankers expect 2015
to herald the start of a wave of transformational deals in
the banking sector, driven in large part by government
seeking to remove over-capacity in the market.
In April, Singapore-based Oversea-Chinese Banking
Corp. (OCBC), Southeast Asias second-largest lender
by assets, purchased Wing Hang bank for US$5bn the
fifth largest public M&A deal ever in Hong Kong, and the
largest FIG M&A deal there since 2001. Bankers predict a
wave domestic banking deals aimed at creating greater
scale and efficiencies. The Philippines, which boasts
around 40 lenders and Indonesia with 80, are seen as ripe
for consolidation. The Philippines relaxed its rules in 2014
to allow foreign banks to own 100% of local banks.
INDONESIA M&A ACTIVITY*
VALUE US$bn

NO OF DEALS

15,000

500

12,000

400

9,000
300
6,000
200

3,000

100
2011

2012

2013

2014 YTD*

* Year-on-year like-for-like comparisons Jan 1 to Nov 27 2014

Source: Thomson Reuters

SINGAPORE M&A ACTIVITY*

This could produce a wave of pan-regional deals as

banks across the region are looking to build stakes or
merge with partners to take advantage of increasingly
integrated markets in ASEAN countries. At the end of
September, Taiwanese insurer Cathay Financial bought
20% of Rizal Commercial Banking Corp (RCBC) of the
Philippines for about US$400m. Across Asia, there is
a desire to consolidate banks and create bigger, panregional players, said Pilarczyk

POLITICS V PRICES
Part of South-East Asia were dogged by political
uncertainty in 2014. Bankers are waiting to see the impact
of the new government in Indonesia, while Thailand
was dogged by unrest following chaotic elections, while
Malaysias elections were hit by fraud allegations. But
deal-makers remained sanguine and argue that high
company valuations, rather than political instability, held
back M&A activity in those countries. Some overseas
companies used to shy away from South-East Asia as a
destination for M&A because of potential political risk,
but thats largely not the case anymore, said Gong.
Indonesia continues to be on the top of the list for many
companies looking at strategic acquisitions in South-East
Asia, followed by the Philippines and Thailand.
There were 69 deals worth US$6.3bn targeting
Indonesia in 2014, compared with 168 worth US$6.5bn
during the previous 12 months. A mismatch between
buyers and sellers expectations is most marked in
Indonesia, where there was a reluctance on the part of
many family businesses to sell. Thats partly because
some families who sold businesses before and during the
crisis have seen the value of those companies multiply, so
many want to hold on to their business while it continues
to grow, said Gong.
At the same time, overseas giants such as Coca-Cola
have been focusing on organic growth but as Mondelez
showed in Vietnam, they are reaching an inflection point
where they want to put capital to work and generate a
return, even if prices remain high. A few years ago many
were cautious about investing in the Philippines, but now
they have adopted a completely different view and see
significant potential in the country, Gong added.
Meanwhile Thailand is showing signs of a recovery in
deal-flow, which halved in 2014 and ground to a halt at the

MALAYSIA M&A ACTIVITY*

VALUE US$bn

NO OF DEALS

100,000

1,000

VALUE US$bn

NO OF DEALS

40,000

1,000

35,000

80,000

950

60,000

30,000
25,000

900
40,000

20,000

800

15,000
850

20,000

10,000
5,000

800

0
2011

2012

2013

2014 YTD*

600
2011

2012

2013

* Year-on-year like-for-like comparisons Jan 1 to Nov 27 2014

* Year-on-year like-for-like comparisons Jan 1 to Nov 27 2014

Source: Thomson Reuters

Source: Thomson Reuters

December 2014 In association with Merrill Datasite

2014 YTD*

800

SOUTH EAST ASIA M&A REGIONAL REPORT 2014

start of year amid anti-government protests in the run up

to elections. ING put the intended sale of its 31% stake in
TMB, Thailands seventh largest lender on hold following
the turmoil. But since the elections, foreign company
interest has revived while Thai conglomerates are cash-rich
and seeking deals that will deliver growth.
Some Thai businesses such as the Charoen Group
were relatively unaffected by the financial crisis and
now have the firepower to look at acquisition
opportunities, said HSBCs Lim. Charoen
Sirivadhanabhakdi, one of the acquisitive tycoons in
the region, purchased Singapore-based drinks company
Fraser and Neave in 2013 and in December 2014 entered
into exclusive negotiations with OCBC to acquire its stake
in United Engineers, one of Singapores oldest construction
companies.
Meanwhile in August, Berli Jucker, a consumer-goods
distributor also controlled by Sirivadhanabhakdi paid
655m for the Vietnamese cash and carry business of
Germanys Metro. This followed the US$6.6bn acquisition
in 2013 by CP All, Thailands largest convenience store of
domestic cash and carry group Makro.

PRIVATE EQUITY
Heady valuations notwithstanding, private equity firms
are showing appetite for deal-making. Firms such as
KKR, Blackstone and TPG are looking to invest an
estimated US$138bn in dry powder across Asia as a
whole. In May, KKR announced the US$1.1bn takeover of
Singapores Goodpack Ltd, the worlds largest maker of
intermediate bulk containers its first listed M&A deal
from the US$6bn Asia fund it raised last year and the
regions biggest ever.
Private equity firms, which are enjoying receptive
financing conditions, are overlooking short-term political
concerns and taking a longer view on a region that boasts
a growing middle class, increasing urbanisation and rising
incomes. When it closed its fund, KKR said it would focus
on deals that will take advantage of rising consumer trends
identifying domestic investment in consumer, retail,
healthcare, education and certain industrial sectors.
As well as looking to deploy firepower, sponsors are
also looking to exploit strong valuations with a series of
disposals, Were starting to see the first wave of exits by

PHILIPPINES M&A ACTIVITY*

private equity funds of first-generation assets in the region.

These are mid-market deals and we expect more of them,
said Willett.

OIL PRICE SLUMP

Indonesia and Malaysia are the countries most exposed
to plunging oil prices, which fell 40% during the last
three months of 2014 to hit a five-year low on December
12. The current low oil price could be adversely affecting
some oil and gas companies in Malaysia and Indonesia.
If it continues to fall, we should expect to see more M&A
activity, said Lim. Malaysian oil giant Petronas is in the
midst of a non-core disposal programme, selling assets
that offer little growth prospects, particularly in Africa,
while at the same time looking to make oil investments
across the globe. A weak oil price will produce winners and
losers, and that means more M&A.
It is dangerous to generalise about South-East Asia
because of the different challenges and opportunities
in each country, but greater regional integration and
favourable demographics has made it a much more
attractive destination for foreign companies seeking
growth, while its cash-rich domestic champions are seizing
the opportunity to flex their muscles on a global stage.
All in all, 2015 should be an exciting time for the regions
deal-makers.
THAILAND M&A ACTIVITY*
VALUE US$bn

NO OF DEALS
400

30,000
25,000

350
20,000
300

15,000
10,000

250
5,000
0

200
2011

2012

2013

2014 YTD*

* Year-on-year like-for-like comparisons Jan 1 to Nov 27 2014

Source: Thomson Reuters

VIETNAM M&A ACTIVITY*

VALUE US$bn

NO OF DEALS

10,000

200

VALUE US$bn

NO OF DEALS

4,000

400

3,500
8,000

3,000
350

2,500

6,000
150
4,000

2,000
1,500

300

1,000
2,000
500
0

100
2011

2012

2013

2014 YTD*

250
2011

2012

2013

* Year-on-year like-for-like comparisons Jan 1 to Nov 27 2014

* Year-on-year like-for-like comparisons Jan 1 to Nov 27 2014

Source: Thomson Reuters

Source: Thomson Reuters

2014 YTD*

In association with Merrill Datasite December 2014

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