Mergers & Acquisitions

Hong Kong M&A deals up by almost half in 2017 as mainland firms buy into property, insurance sector

PUBLISHED : Wednesday, 27 December, 2017, 8:03am
UPDATED : Wednesday, 27 December, 2017, 11:28am

Mergers and acquisitions activity in Hong Kong is up by almost a half this year, data from Thomson Reuters shows.

The increase in deals has been driven by a string of mainland firms buying into Hong Kong property and insurance companies as well as internal restructuring of giant firms.

The city saw M&A deals worth US$204.8 billion this year, up 43.2 per cent from 2016, according to the data. That is still some distance behind the record set in 2015 of US$270.3 billion.

The highest value deal was Wharf (Holdings), a unit of Wheelock & Co, which in November spun off the entire share capital of Wharf Real Estate Investment to its shareholders. This transaction was valued at US$23.3 billion, the Thomson Reuters data showed.

Another notable deal was China Unicom’s mixed-ownership reform, which saw a number of private-sector investors buy into China Unicom (Hong Kong) for US$11.26 billion (HK$88.1 billion).

China Unicom sees windfall from parent’s mixed-ownership reform deal

The increase in M&A was also driven by mainland companies investing in Hong Kong insurance players, as well as the overseas expansion of those insurers. A prime example was AIA buying Commonwealth Bank of Australia’s life insurance business in Australia and New Zealand for US$3.05 billion.

By sector, real estate remained top of the M&A pile, accounting for about a third of all deals. Major property deals included the Wharf transaction, the acquisition of the Centre tower in Hong Kong for US$5.15 billion and the proposed sale of assets by the Link Reit at US$2.95 billion.

The average M&A deal size climbed to US$138.1 million in 2017 from US$96.2 million last year.

There were two jumbo deals above US$10 billion in Hong Kong in 2017 and five above US$5 billion, the data showed.

Goldman Sachs leads the field for advising on Hong Kong deals this year, with 12.6 per cent market share worth US$25.8 billion in related proceeds.