The Herbert Smith Freehills inaugural Asia Pacific M&A Review found that the strong fourth quarter of 2013 is set to be reflected by further corporate deal flows this year.
“After a strong finish to 2013, M&A markets in the Asia-Pacific region have continued to perform well in 2014,” Herbert Smith Freehills partner Tony Damian said.
“We expect to see a significant increase in cross-borders deals throughout the year.
“Increased business confidence, along with a liberalisation of foreign investment regulation in the region, will drive deal flow,” he said. “An improved regulatory environment combined with continued positive sentiment bodes well for a strong year.”
The proposed Trans-Pacific Partnership has the potential to create new foreign investment opportunities across the Asia-Pacific rim, boosting investment from outside Asia as well as cross-border deals within the region, the firm’s head of corporate in Asia, Austin Sweeney, said.
In Australia, the unexpected rejection of Archer Daniels Midland’s proposed acquisition of Graincorp in December 2013 was seen as a negative development.
However, recent decisions – including the approval of China State Grid’s acquisition of significant stakes in Australia’s energy infrastructure – indicate that Graincorp reflected a unique set of circumstances, according to the firm.
“With the Australia-South Korea free trade agreement well underway, and negotiations on the Trans-Pacific Partnership continuing, Australia is in an increasingly strong position to benefit from a boost in foreign investment,” Herbert Smith Freehills' head of corporate, Australia, Andrew Pike said.
“We expect 2014 to be a busy year for Australia’s Foreign Investment Review Board (FIRB) on the policy front,” Mr Pike said.
“Prior to the last election, a Senate committee looked into many aspects of FIRB, but in particular the national interest test.”
Looking offshore, China’s Ministry of Commerce has indicated it will revise the country’s foreign investment rules in 2014, presenting a strong opportunity to make its foreign investment enterprise (FIE) laws more attractive by having the rules conform with the newly-amended Company Law and correcting numerous legislative anomalies that burden foreign investors.
The new FIE rules might also reflect the initiatives introduced in the Shanghai Free Trade Zone, including removing foreign investment approval requirements for most FIEs, opening more service sectors and lowering the foreign investor criteria.
“The global economy weighed on China in 2013 but M&A activity has returned strongly and improving sentiment should benefit the country this year. Proposed regulatory changes to foreign investment should help to further growth,” Mr Sweeney said.
In Singapore, government authorities including The Singapore Economic Development Board, the Monetary Authority of Singapore, and the Singapore Exchange continue to look at regulatory change to facilitate international investment in acquisitions, new business and listings.
Singapore is now the third ranked country in the Cass Business School’s most recent “M&A Attractiveness Index” and this success is expected to continue.
