Southeast Asia Capital Confidence Barometer April – October 2013

M&A outlook

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Deal appetite among SEA respondents declining

With organic growth becoming a clear winner for corporate growth in Southeast Asian markets, acquisitions have become a secondary priority.

75%   of SEA respondents do not expect to make acquisitions in the next 12 months.

Percentage (%) of respondents who expect to pursue acquisitions in the next 12 months:

Sentiments around the number of deal opportunities, the quality of deal opportunities as well as deal closure rates have each declined among SEA respondents compared to six months ago.

46%   of SEA respondents expect the valuation gap between buyers and sellers to increase.

61%   of SEA respondents expect average deal size in the region to be below US$50 million. 36% of SEA respondents believe that the average deal size to be between US$51 million to US$500 million.

Southeast Asia has shifted back into focus

Despite the low appetite for acquisitions over the next 12 months, respondents in Southeast Asia are more likely to invest within their own region, with countries in the region representing six of the top ten preferred investment destinations. Frontier markets such as Myanmar and Cambodia have now also made it into the top ten.

While only Indonesia has qualified for the top investment destination among global respondents, Southeast Asia markets also feature prominently among other Asian and Australian respondents.

 

Which are the countries in which you are most likely to invest over the next 12 months?
Inbound investors


Appetite to sell is low

Divestments are not on the top of SEA respondents’ agendas, with only 18% of respondents intending to carry out a sale over the next 12 months.

If a divestment is pursued, the most likely structure involves the contribution of a business unit to joint venture (43%), followed by the sale of one or more business units (30%).