Ansarada is the one place where businesses get ready for their next material event.

Asia M&A: Bankers Predict Strong 2016

Those who run mergers and acquisitions departments in Asia for global investment banks are confident that the M&A surge of 2015 – the deal value of which passed $1 trillion for the first time according to Dealogic – has a very good chance of being repeated in 2016.

Samson Lo, head of M&A in Asia for UBS, says: “There is no sign M&A in Asia Pacific will slow down in 2016. M&A volume will be just as robust as it was in 2015.”

No one seems to see Asia Pacific deal volumes dropping back to anything like their level between 2010 and 2013. In those years, average deal volume bumped along around $500 billion a year with no clear upward trend. Then lift-off: in 2014 it hit $849.6 billion, according to Dealogic data, and, in 2015, $1.27 trillion, 49 percent higher.

John Hall, co-head of M&A in Asia for JP Morgan, says: “There is a secular trend towards more M&A in Asia that is going to fuel more domestic, intra-regional and cross-border M&A activity in Asia Pacific next year [2016].”

Still, 2015’s M&A deal volume in Asia Pacific has been skewed significantly by internal corporate reorganisations that remained, late in the year, the biggest deals in the region.

Cheung Kong, Samsung

January 2015’s $53.05 billion acquisition by Cheung Kong of a majority stake in its related corporate unit Hutchison Whampoa, all part of Hong Kong billionaire Li Ka-shing’s business empire, is still the biggest M&A deal of the year in Asia Pacific, according to Dealogic.

Li’s Cheung Kong Property was involved in Asia’s second-biggest deal of 2015, when it was acquired by existing shareholders in a transaction worth $36.87 billion, says Dealogic.

South Korea’s family-owned conglomerates, notably SK Group and Samsung Group, also reorganised their corporate empires. SK C&C, an information technology services company, acquired SK Holdings for $24.92 billion in April, the fourth-largest M&A deal in Asia Pacific, according to Dealogic.

In 2016, China, Japan and Australia will be the major takeover hubs, the traditional engine rooms for Asia Pacific M&A deals.


JP Morgan’s Hall says: “Japan, China and Australia are the three major M&A markets in Asia. We expect China to continue to drive the growth of M&A activity and there will be strong outbound deal flow from both state-owned and privately-owned enterprises. Restructuring is one of the themes that will continue to drive more M&A in Asia.”

Mayooran Elalingam, Deutsche Bank’s head of M&A in Asia, agrees China will continue to be the major force in deals in the region even while its economy slows.

Mr. Elalingam says: “Despite the macro environment, China M&A shows no signs of slowing down.

“The most significant change in the past few years has been the expansion of the types of Chinese buyers, from large-cap state-owned enterprises in the natural resources sector to a broad range of private entities, private equity firms and smaller state-owned enterprises from China making acquisitions across consumer, industrial and technology sectors. These themes will continue to be relevant in China M&A in 2016.”

Chinese buyers may concentrate more on Europe than the US, as companies seek to transform themselves into global brands.

UBS’s Mr. Lo says: “China will continue to build portfolios of overseas assets in insurance, leasing and finance, attracted by the lower asset prices of these businesses in Europe compared to the US and the fact that private equity has a lot of these assets for sale in Europe. Chinese buyers are reluctant sometimes to pursue deals in the US.

The takeover bids by Chinese companies outside their borders will be cash, said Lo, as China’s regulations prevents non-Chinese holding A shares.

Chinese companies will be challenged by Japanese rivals in their pursuit of financial assets, according to JP Morgan.

Outbound activity

Brian Gu, co-head of M&A in Asia for JP Morgan, says: “Japanese companies are going to continue to do more outbound M&A in the insurance, banking and asset management areas.”

Mr. Elalingam does not expect Asian activity to slow down even if the Federal Reserve raises interest rates, potentially making acquisition financing more expensive.

Mr. Elalingam says: “Most Asian acquirers aren’t big users of leverage, so weaker financing markets aren’t going to be the main factor when Asian buyers of assets decided whether or not to do a deal.”


Simon Mordant, executive co-chairman of Sydney-based boutique advisory firm Luminis Partners, an Evercore affiliate, said Australian M&A deal volume in 2016 will be driven by favourable economic and political factors.

Mr. Mordant says: “Low interest rates, favourable exchange rates, increasing boardroom confidence on political outlook and leadership are all good signs. We expect inbound interest as a result in rural, health, education, real estate, mining, oil and gas, funds management, tourism and service industries.

“We expect continued domestic consolidation across all industries where scale and cost competitiveness are key.”

Aidan Allen, Citigroup’s head of investment banking for Australia and New Zealand, expects deals in the commodity sector.

Mr. Allen says: “Activity in the energy and resources sectors should continue, particularly as commodity prices stabilise and companies rebalance their portfolios. Similarly, we expect to see activity from non-bank financial intermediaries as regulatory pressures see the bank’s rebalance their portfolios of businesses.

South-east Asia

Only south-east Asia it seems will still be a headache for investment banks seeking to facilitate M&A.

Mr. Elalingam says: “The south-east Asia market continues to be challenging in 2016, with most of the economies in this region facing broader macro issues that will affect deal activity.”

When discussing fees, bankers acknowledge even with an increase in Asia Pacific deal volume in 2016, fees are not likely to change much from previous years, a fact borne out by data.


Data on deals and data on banks’ revenues don’t tally for a number of reasons, including timing effects; the bulk of fees don’t flow until a deal is completed, months after it is announced.

Still, Dealogic estimated fees in the year to December 22 of $1.87 billion were only 5 percent ahead of the same period in 2014,

But the increase in M&A volume in Asia Pacific has led investment banks to bolster deal teams, albeit incrementally.

JP Morgan’s Hall says the increase in M&A activity “supports the momentum to increase M&A teams”.

Raise your company’s potential with the best of 2018

Each New Year brings with it an opportunity to reflect and consider how your company and its potential have grown…

Advisors: Your top picks for 2018

2018 has been a massive year (where did the time go?), with a number of game-changing feature launches that are…

Medical tech behind booming overseas interest in Australian Healthcare

Download the Indicators report here Our latest quarterly Indicators report shows a massive 704% increase in overseas interest in Australia’s…

Get in touch

to find out how Ansarada will safeguard your reputation and add more value to your clients.   

Contact us