APAC’s M&A hits RM2.22 tril fuelled by tech innovation and ESG agenda

ASIA-PACIFIC’S merger and acquisition (M&A) activities hit an all-time high in the first six months of 2021 as markets begin their revival from the COVID-19 pandemic.

M&A values targeting the region increased to US$535 bil (RM2.22 tril), up from US$284 bil in the same period last year, according to new analysis by Ernst & Young PLT (EY).

Despite many parts of the global economy still operating under restrictions, cross-border transactions have also staged an impressive comeback, increasing by almost three times year-on-year (yoy) to US$159 bil.

There were more than 50 deals over US$1 bil announced targeting Asia-Pacific so far this year, increasing by almost five times yoy.

The technology sector continues to lead deal activity in the region, accounting for almost one-third (28%) of the cumulative deal value in 1H 2021.

M&A targeting technology companies hit a record high in the region with deal value increasing by 88% yoy. The advanced manufacturing and mobility sectors were the subsequent most active in terms of deal activity.

Outbound value in Asia-Pacific rebounded to pre-COVID-19 levels to US$85 bil. The inbound value reached a historical high at US$74 bil, jumping by more than 170% compared to the pre-COVID-19 pandemic average.

Like Asia-Pacific, the Americas and Europe have witnessed record growth with transaction value totalling US$1.6 tril – almost double the average seen in the five years prior to the pandemic – and US$653 bil respectively.

Preman Menon

“We expect to see M&A trends in Malaysia mirroring the trends seen globally albeit lagging behind the recent pace seen in the larger markets,” commented EY’s Malaysia strategy and transactions leader Preman Menon.

“The COVID-19 pandemic has accelerated the need for Malaysian businesses to review and realign their strategy and formulate their transformation journeys for the future.”

While plans and growth trajectory vary by sector, EY has observed common themes revolving around transformation, agility and sustainable growth.

“In line with this, we believe that M&A activity will feature as companies look to acquire technology and skillsets, favouring ‘buy’ versus ‘build’,” added Preman.

In addition, M&A activity in the renewable energy sector almost tripled globally in 1H 2021 compared to the same period last year as CEOs look to meet ambitious environmental targets through transactions.

The value of these environmental, social and governance (ESG)-related deals has jumped from US$35.7 bil in 1H 2020 to US$96.5 bil in 1H 2021. – Sept 13, 2021

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