M&A Market Briefing - Southeast Asia July 2019 | 1

Election season has swept much of Asia this year, with vast populations going to the polls in India, Indonesia, and much of Southeast Asia. For some investors, this has meant time seated on the sidelines of dealmaking until results, and prospective leadership changes, were announced. However, even amid these uncertainties, M&A and PE/VC investment on the whole maintained much of its momentum in the first half of 2019. In markets where it has slowed, investors may now be tempted to ramp up dealmaking as the political and regulatory direction of these markets becomes clearer.

Across Southeast Asia, investors wary of stagnated deal flow in a political year may be at ease given the US$34.9bn in deals announced in H1 2019, well on track to match FY 2018’s US$57.8bn. Foreign capital, too, may be embracing these

results, with international investors contributing US$13.6bn to deal totals in H1 2019, well aligned with the US$22bn in FY 2018 and other years prior.

In India, M&A was off to a sluggish start in H1 2019 with US$33.5bn ahead of general elections in April-May. However, this is compared to deal flow following a blockbuster year in 2018 where US$102bn in transactions came to market. A fairer comparison for the half-year’s totals would be to 2014, another election year on the subcontinent, when US$39.9bn in deals were made for the full year. Yet, even with the elections behind it, questionable global economic conditions and fiscal uncertainties related to exchange rate volatility could pose negatives to dealmaking.

M&A totals (H1 2019)

Southeast Asia

Deal value

US$34.9bnDeal volume

162

Southeast Asia and India M&A (H1 2019)

Value (% increase/decrease from H1 2018)

Volume (% increase/decrease from H1 2018)

VietnamUS$1.4bn 15 deals ↓8% ↓38% Philippines

US$2.2bn 8 deals ↑398% ↓43%

MalaysiaUS$3.8bn 24 deals ↑23% ↓45%Singapore

US$17.2bn 58 deals ↑156% ↓2%

ThailandUS$3.1bn 23 deals

↓65% ↓30%

IndiaUS$33.5bn 180 deals ↓53% ↓23%

IndonesiaUS$7bn 28 deals↑102% ↑4%

Southeast Asia M&A: Target geographies (H1 2019)

IndonesiaSingapore Malaysia Thailand Philippines Vietnam Myanmar Cambodia

0% 20% 40% 60% 80% 100%

Dealvolume

Dealvalue 20% 11% 9% 7% 4%49%

36% 17% 15% 14% 5% 10% 2%1%

M&A Market Briefing - Southeast Asia and India

JULY 2019

2 | M&A Market Briefing - Southeast Asia July 2019

Record India M&A values set in 2018 may be difficult to surpass, however, with stability in government, an uptick in dealmaking in H2 2019 and forthcoming years is likely. Foreign inbound M&A is expected to continue assuming continuity of governance with

participation from historic investors (US, UK and Japan) and new entrants (China), according to Mergermarket intelligence.

Emerging Southeast Asia continues to be a promising investment destination for foreign capital. Chinese investors, in

particular, have shown interest in recent years as they face rising barriers in more developed markets. Provided political stability, foreign inbound M&A will be a prominent theme as Chinese buyers compete with other active dealmakers from Japan and the US.

India M&A: Domestic and foreign inbound

Southeast Asia M&A: Target geographies

Deal

val

ue (U

S$m

)

Singapore

Malaysia

Indonesia

Philippines

Thailand

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

H1 2019201820172016201520142013

Southeast Asia M&A

Foreign inbound deal totals

H1 2019

US$13.6bn78 deals

FY 2018

US$ 22bn200 deals

Foreign inbound M&A (H1 2019)

Deal valueBidder regions for India (H1 2019)

Bidder regions for Southeast Asia (H1 2019)

Deal volume

Deal value Deal volume

49% 22% 7% 19%

1%

1%

2%

North America

19% 41% 20% 20%

Europe 11% 8% 26% 27%

North Asia

Australasia

Southeast AsiaAfrica

8%9%8%

Japan

46%13% 16% 32%Middle East

3%

Domestic values Inbound values Domestic volume Inbound volume

Dea

l val

ue (U

S$m

)D

eal volume

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

0

50

100

150

200

250

H1 2019201820172016201520142013

India M&A

Foreign inbound deal totals

H1 2019

US$15.1bn90 deals

FY 2018

US$ 46bn224 deals

M&A Market Briefing - Southeast Asia July 2019 | 3

The financial services opportunity is a standout theme in both India and Southeast Asia as these economies transform from largely cash-based to transactions-driven and mobile payments. Recent trends have seen consolidations among key banking players and investment from foreign capital. M&A in Indonesia, in particular, has trended up since 2016, with growing interest from Japanese and South Korean investors.

Dealmaking in India’s TMT sector has also flourished, driven by interest in e-payment and e-commerce targets. As the country’s digital economy expands, these deals and others involving fintech will become mainstays of the deal space, featuring acquisitions by tech giants from China, Japan and the US as they enter or expand in the market.

Target sectors (H1 2019)

Agriculture

Construction

Real Estate

Pharma, Medical & Biotech

Leisure

Transport

Consumer

Technology

Business Services

Energy, Mining & Utilities

Industrials & Chemicals

Financial Services

0% 5% 10% 15% 20% 25% 30%0%5%10%15%20%25%30%35%40%

Deal volumeDeal value Deal volumeDeal value

29% 14%

36% 9%

16% 14%

12% 10%

10% 9%

8% 6%

4% 12%

4% 5%

3% 11%

3%

2% 5%

1% 4%

1% 2%

14%

27% 16%

12% 7%

11% 13%

6% 18%

5% 10%

4% 6%

3% 3%

3% 7%

2% <1%

<1%

<1%

2%

1%

Southeast Asia India

Deal

val

ue (U

S$m

)

Indonesia

Malaysia

Philippines

Singapore

Thailand

$0

$2,000

$4,000

$6,000

$8,000

$10,000

H1 2019201820172016201520142013

Southeast Asia M&A: Financial Services

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

H1 2019201820172016201520142013

Deal

val

ue (U

S$m

)

Consumer Financial ServicesIndustrials & Chemicals TMT

India M&A: Target sectors

Deal

val

ue (U

S$m

)

Indonesia

Malaysia

Philippines

Singapore

Thailand

$0

$2,000

$4,000

$6,000

$8,000

H1 2019201820172016201520142013

Southeast Asia M&A: TMT

4 | M&A Market Briefing - Southeast Asia July 2019

Harness the power of DatasiteOne – the best-in-class app for due diligence. Focus on your clients, your partners and your results. DatasiteOne releases a series of new innovations designed to intelligently accelerate, support and inform your deal process.

Request a demo at merrillcorp.com, or call +65 6653 1666

INTELLIGENCE.SPEED. POWER.

Program Ad Exponent Exchange A5.indd 1 7/9/19 8:34 AM

PE/VC growth momentum in India reached record investment levels in 2018 and already H1 2019 totals have surpassed those of H1 2018. As with M&A, continued stability following the recent general election could prove enticing for foreign investment from pension funds and super funds, according to Mergermarket intelligence.

In Southeast Asia, PE/VC investment has trended down after a record year in 2017, one led by significant buyout activity. Despite a noticeable year-on-year decline, 2018 delivered strong totals nonetheless and H1 2019 lags the same period the year prior by a nominal difference.

Southeast Asia and India PE/VC investment trends

Southeast Asia: PE Investment PE Buyout VC Investment

India: PE Investment PE Buyout VC Investment

US

$m

$0

$5,000

$10,000

$15,000

$20,000

$25,000

H1 2019201820172016201520142013

India PE/VC investment half-year comparison

H1 2018 H1 2019

465 investments worth

US$16.8bn

246 investments worth

US$28.6bn

Southeast Asia PE/VC investment half-year comparison

H1 2018 H1 2019

161 investments worth

US$7bn

257 investments worth

US$5.7bn