According to the firm’s annual Asia Pacific M&A Review, the availability of funds will increase as many firms seek to broaden their portfolios and move into the energy sector.
Herbert Smith Freehills partner Tony Damian said a “flurry of investment activity” is expected in the region in the second half of this year.
“A number of factors have emerged that will drive strategic consolidation and acquisitions in the energy sector and ramp up the volume of M&A transactions throughout the region.
“There is a considerable amount of sovereign wealth and pension fund capital available in the region with an increasing desire for large energy infrastructure assets with predictable returns,” said Mr Damian.
Herbert Smith Freehills energy partner, David Clinch, added that the falling oil price will “kick-start” a “wave of consolidation” in the resource sector.
“Many firms in the sector are cautious as they wait to see where the price of oil will settle before making any strategic plays. However, we consider this is likely to come to a head in the second half of 2015 if prices are relatively stable.
“Divestment activity will also be driven by companies looking to raise capital in the new price environment,” Mr Clinch noted.
Regarding the Australian energy and resource sector, Herbert Smith Freehills indicated a considerable demand for Australian assets.
“As Australia moves into an interesting selling market, we are seeing growing interests from overseas buyers including global energy majors, private equity investors and sovereign wealth funds,” a statement issued by the law firm said.
According to the firm’s head of corporate Asia, Austin Sweeney, there will also be significant M&A activity in south east Asian emerging markets.
“We have seen quite a bit of activity, especially from Japanese and Chinese buyers into that region, and relevant sectors have recently included oil and gas, pharmaceuticals, consumer, TMT infrastructure and real estate,” Mr Sweeney concluded.
