M&A Asia deals show tenfold Increase

Date: 29-11-2007
Source: Financial Times

The volume of mid-market mergers and acquisitions deals in Asia has climbed tenfold since 2003 as companies seek to build scale in the region, according to a report published on Tuesday. Mid-market M&A volume is regarded as an important barometer of economic activity as it signals that companies are seeking to grow and reduce market inefficiencies.

The study, commissioned by Deloitte, the professional services firm, showed that there were nearly 100 deals in the first quarter of this year in the $50m to $300m range, compared with just 10 in the corresponding period in 2003.

The research, by Mergermarket, the data provider, which covers Asia excluding Japan and Australia, highlights the huge increase in corporate activity in recent years, driven by the region's soaring growth rates. The study showed that since the start of 2003 the region was home to almost 900 mid-market deals with a combined value of more than $100bn.

According to the authors, mid-market deals now account for about a fifth of the region's overall M&A activity, a ratio in line with the US and Europe. Such deals, which are running at a steady $10bn per quarter, are expected to grow as companies eye expansion opportunities at home and abroad.

China has led the way in mid-market M&A deals in Asia in recent years. The report showed that since January 2003 there have been 337 such deals in the country, worth a combined $39bn. This is three times larger than India both in terms of value and volume of mid-market M&A.

Mid-market M&A in China has been dominated in recent years by foreign companies acquiring stakes in fast-growing local firms, although the balance is shifting as ever greater numbers of Chinese companies seek outbound acquisitions.

Lawrence Chia, Deloitte partner and head of China M&A, said that Chinese companies were looking for mid-market M&A opportunities. However, he said, they were cautious about investing at a time of high domestic valuations.