APAC CEOs expect to look beyond their borders but stay regional for deals
As the world reopens following the pandemic, and Asia-Pacific companies look to use M&A to transform, we’ve seen a significant rise in cross-border deals. More than four out of five (83%) of Asia-based CEOs in the EY 2022 CEO Outlook Survey say they intend to pursue cross-border M&A in the next 12 months, versus 37% of CEOs in North America and 71% in Europe.
However, for many APAC CEOs, cross-border activity will be regional, as they cite China, India and Singapore as three of their top five destinations (the US and the UK round out the top five).
Digital disruption and business model reinvention have companies looking cross-sector
In addition to looking cross-border, Asia-Pacific CEOs are also looking cross-sector to expand digital, product and services capabilities, and expand market reach. Based on the results of the EY 2022 CEO Outlook Survey, 60% of technology acquisitions occurred outside of the technology sector.
Asia-Pacific companies, regardless of sector, are looking to evolve into technology companies to keep up with escalating consumer demand and growth in digital capabilities across the region.
The percentage of the population with access to mobile devices is rising swiftly in Vietnam and Indonesia. For example, in 2020, approximately 176m Indonesians had internet access through their mobile devices. By 2026, this number is expected to rise to more than 233m.1
Further, an estimated 40 million new internet users came online in the Southeast Asian region in 2021, bringing internet penetration to 75%. Southeast Asia’s digital economy2 — and e-commerce in particular — is experiencing exponential growth. Asia-Pacific companies want a share of this growing market, but they need the digital capabilities to capture it.
While all sectors vie for technology assets, technology companies are stretching their boundaries to secure precious raw materials for manufacturing chips and electronic products. At the same time, they are making strategic investments that enable other sectors, including AMM, to thrive.
Meanwhile, the AMM sector, especially the mobility companies, have been focused on acquiring technology capabilities that will help them to accelerate innovation in autonomous driving. In 2021, companies in the mobility subsector generated deal values of US$55b, a 29% year-over-year increase.
In the consumer space, companies are seeking technology assets that enable them to improve their value and supply chains and strengthen consumer experience.