Asian tycoons team up with private equity to take companies private as coronavirus weighs on stock prices, fuels recession concerns
- Cash-rich hoteliers, health care companies among those ripe to go private, deal makers say
- Take private deals in first quarter worth over US$14.6 billion versus US$287 million a year ago, Dealogic says
Asian tycoons and their families are taking their companies off stock exchanges in the region by the most in a decade as the coronavirus pandemic weighed on valuations amid recession concerns.
The brisk pace is likely to continue as founders look to delist firms they deem as undervalued or to unravel convoluted corporate structures, while private equity funds prepare to deploy US$1.5 trillion of global war chest, deal makers said.
“Take-private transactions will feature prominently in mergers and acquisitions this year,” said Dieter Turowski, chairman of investment banking across Asia-Pacific at Morgan Stanley. “The stars align for companies around themes of corporate simplification, strategic motivation, and more than ever, undervaluation.”
There have been 23 take-private deals worth US$14.6 billion this year through Tuesday across Asia-Pacific, the busiest quarter in the past decade, according to Dealogic. There were seven deals worth US$287 million a year ago. The pace this year is matching those seen when stock slumped during the Sars (severe acute respiratory syndrome) outbreak in 2003, bankers said.