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Compliance casts ‘shadow’ over Aussie M&A

Compliance casts ‘shadow’ over Aussie M&A

James Mitchell
— 1 minute read

Australia has driven down corporate deal making activity in the Asia-Pacific region over 2018 amid growing concerns over compliance and ambiguity over future policies.

The 2018 Mergermarket Global M&A report, released this week, found that the Asia-Pacific region (excluding Japan) recorded 4036 deals for a combined US$717.4 billion, signifying a 2.6 per cent increase in value and a drop of 42 by deal count compared to 2017.

Industrials & Chemicals became the most attractive sector in 2018 by both value and volume, posting US$115.2 billion across 832 deals, an increase of 23.5 per cent in value compared to 2017.

“This was largely due to one blockbuster tie-up involving Chinese chemical product manufacturers Yantai Wanhua and Wanhua Chemical worth US$12.7 billion,” the report said. 

Another notable sector was Pharma, Medical & Biotech which saw a dramatic uptick in Q4 2018, posting a value of US$14.5 billion, while reaching its largest quarterly value on Mergermarket record. The sector reached an annual value of US$ 41.3 billion, a 63.8 per cent increase compared to 2017.

Meanwhile, foreign investment into Asia-Pacific (excluding Japan) reached US$122.5 billion, equivalent to a 4.4 per cent increase compared to 2017

“The downturn in Australian activity, long the most attractive destination for foreign investors in recent years, was key to the decline,” according to the report. 

“Concerns over compliance and uncertainty on future policy in the energy market are starting to cast a shadow on Australia.”

The reported noted that outbound M&A was buoyant while inbound M&A experienced mild growth. The value of outbound transactions reached US$160 billion in 2018, hitting its second highest on Mergermarket record and posting a 52.4 per cent increase compared to 2017.

Goldman Sachs & Co led the financial advisor rankings by value having advised on 72 deals worth US$139 billion up 23.3 per cent by value compared to US$113 billion.

KPMG led the financial advisor rankings by deal count, having advised on 114 deals worth US$25 billion. 

“M&A experienced a robust 2018, reaching its third highest annual value on Mergermarket record,” Mergermarket research analyst Lucy Shen said.

 

Compliance casts ‘shadow’ over Aussie M&A
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