M&A deals surge as market rebounds
Merger and acquisition (M&A) activity in the Asia-Pacific surged in the first nine months of the year in further evidence that cheap funding and a rebounding market are powering a wave of deal-making.
M&A deals involving Hong Kong firms rose 38 per cent year on year to US$61.1 billion between January 1 and September 21, according to Thomson Reuters figures.
Cross-border M&As involving Hong Kong buyers shot up to US$25 billion, nearly twice as high as the comparable 2009 period. M&A deals on the mainland reached US$119 billion from 2,483 deals, for a 12.1 per cent year-on-year rise.
For the whole of the Asia-Pacific excluding Japan, M&A in the first three quarters stood at US$416 billion, up 34.5 per cent from a year earlier.
Louis Tse Ming-kwong, director of VC Brokerage, said M&A activity picked up in the first nine months, reflecting a recovery after fears over the global financial crisis.
'Most people believe the worst of the financial crisis is over and the concerns over the European sovereign bond crisis vanished after European governments offered to help prop up weak economies,' Tse said. 'In addition, interest rates are low, which means corporates can get cheap funding to buy other companies. This situation is likely to continue because interest rates will stay low for a while.'
Tse said many mainland and Hong Kong companies would like to expand by acquisitions. 'It depends on whether they can find good target companies and if they can agree on the price. It won't be easy because when the economy is bouncing back, target companies lift their asking price,' he said.
In terms of the industry, the financial sector is the most attractive to buyers in Hong Kong, leading to US$18.6 billion in deals in the first nine months of the year. In mainland China, however, power and energy firms were the most active sector.
In terms of financial adviser roles, BNP Paribas is the top adviser on Hong Kong mergers and acquisitions for the year-to-date, up from 16th place last year. BNP has advised on the two largest deals involving a Hong Kong company: the acquisition of EDF Energy's British networks by an investor group led by Li Ka-shing, and China Lounge Investments' US$3.05 billion purchase of Denway Motors. Goldman Sachs topped the overall league tables, working on US$93.48 billion of deals, followed by Bank of America Merrill Lynch and Barclays Capital.
Mainland China attracted the most buyers in the region, excluding Japan, with a total of 2,196 deals worth US$81.8 billion in the first nine months of this year, up 10 per cent from 2009. The largest deal on the mainland was China Mobile Group Guangdong's US$5.8 billion acquisition of Shanghai Pudong Development Bank.
