The better the question. The better the answer. The better the world works. У вас есть вопрос? У нас есть ответ. Решая сложные задачи бизнеса, мы улучшаем мир. У вас є запитання? У нас є відповідь. Вирішуючи складні завдання бізнесу, ми змінюємо світ на краще. Meilleure la question, meilleure la réponse. Pour un monde meilleur. 問題越好。答案越好。商業世界越美好。 问题越好。答案越好。商业世界越美好。

Will ASEAN continue to be a bright spot for FS investments in 2019

In 2018, the announced value of the year’s 50 financial services (FS) deals in ASEAN was around USD 7.3 billion. 1

In fact, we believe actual investment in the sector was several multiples of this, with organic growth and partnership arrangements adding to the quantum of investment value, partly driven by the difficulty in getting inorganic deals done in certain markets because of regulatory or structuring reasons.

In 2019, ASEAN promises to retain a strong attraction for both financial investors and corporates looking for growth. This is particularly true in the financial services sector, where we expect to see a continuing mix of direct M&A and organic investment growth.

EY - Where are the financial services investment hotspots?

-----------

1 Source: Merger Market

Where are the financial services investment hotspots?

Across ASEAN, the overall outlook is positive, with investors finding different opportunities in each market:

  • Indonesia – The M&A landscape remains active, with high-profile multi-finance, insurance and banking deals in 2018. This trend is likely to continue, accompanied by digital distribution-led deals.
  • Vietnam – This is a highly active fintech landscape, especially in payments and consumer lending, with banking sector looking at consolidation and capital raising.
  • Philippines – The IMF is forecasting 6.6% economic growth and the financial services sector shows strong potential to grow banking penetration rates in the middle-class consumer groups. We expect to see investment in banking, insurance and payments.
  • Myanmar – Regulatory changes are likely to see an increase in investment flows from both foreign banks and insurers. 
  • Thailand – While not as active as other markets in the region, Thailand’s GDP growth, increasing urbanization and consumer spending will pave way for investment growth, particularly in insurance and asset management.
  • Malaysia – Political changes in 2018 gave rise to market uncertainty in Malaysia. However, interest remains strong in the FS sector, where we expect activity in both banking and insurance.
  • Singapore – Home to a diverse range of private equity (PE), VC and corporate VC funds, Singapore has significant capital to deploy owing to its favourable tax and regulatory regime.  There is, in general, a scarcity of available M&A target in this market but global interest remains strong particularly in the insurance and wealth and asset management sectors.
EY - Across ASEAN, the overall outlook is positive

Usual suspects or new deal makers?

In 2018, PE investors and consortiums made up for around 24% of deals in the sector. In 2019, especially if the markets remain down, we expect this trend to continue or increase. PE investors will be particularly interested in ASEAN’s fintech players with payments platforms and digital wallets but are also showing interest in other sectors such as insurance. We also expect ongoing interest from Japanese and Korean corporate investors.

What will be the headwinds?

We believe the major risks to deal appetite are macro concerns around slowing growth, US dollar fluctuations and trade war escalations. Relative to other markets, ASEAN may be a beneficiary as certain investors look for growth particularly in an environment where valuations fall slightly.

Overall, we are positive on the outlook and opportunities ahead for the sector in the diverse and exciting ASEAN market.

Contact us

EY - Stuart Last

Stuart Last

EY Asean Financial Services Transaction Advisory Leader
+65 6309 8012