PE-backed M&A hits $56bn in Asia

The first nine months of 2014 have been the strongest period for Asia M&A since records began

Private equity-backed M&A activity in the Asia-Pacific region (excluding Japan) surged to a record high in the first nine months of 2014, according to new figures from Thomson Reuters.

Deal value totaled $56 billion during the period, the figures suggest. That’s up 247.7 percent year-on-year, and outstrips the total for the whole of 2013.

According to Thomson Reuters, the record total was driven by at least 11 deals greater than $1 billion, the largest being Sinopec’s sale of a stake in its retail unit to 25 domestic and foreign investors, including financial sponsors, for $17.5 billion.

The total value of M&A deals in the region has reached $552.6 billion for the first nine months of this year, also surpassing the full-year total in 2013 of $542.9 billion. Compared to the same nine-month period last year, M&A activity in the region was up 53.3 percent, making it the strongest period for the region since records began in 1980.

This was largely driven by CITIC Pacific’s acquisition of the main assets of its state-owned parent, CITIC Group, which, at $42.2 billion, was almost two and a half times larger than the next biggest deal, according to Thomson Reuters data. All told, there were at least nine transactions coming in over $5 billion compared to just three for the same period last year. This resulted in average deal value jumping from $72.4 million for the first nine months of 2013 to $99 million for the same period this year.

Despite an 11.4 percent decline in the number of completed deals, completed M&A activity involving the region totaled $347.6 billion, up 27.1 percent year-on-year.

The report also found that M&A advisory fees from completed deals totaled $1.5 billion in the first nine months of the year, up 25.4 percent from last year.

Chinese companies continue to be the most popular M&A targets, both for domestic and foreign acquirers, capturing 52.4 percent of Asia Pacific deal activity. In terms of deal value, the US was the most active non-Asian acquirer of Asian companies, accounting for $19.8 billion worth of transactions from 303 announced deals, according to Thomson Reuters. The financials sector topped the list for largest number of acquisitions, up 154 percent year-on-year, followed by energy & power, up 39 percent to $78.4 billion, and real estate, up 42.9 percent to $76.1 billion.

In a separate report, Thomson Reuters reported the syndicated loan volume for the region totaled $336.7 billion via 1,056 deals, up 5.6 percent from the $318.9 billion via 939 deals completed during the same period last year. More than 14 percent of this loan volume was related to M&A activity, at $47.5 billion via 41 deals, the highest level since 2007 when the equivalent figure was $80.8 billion.

China was the busiest loan market, accounting for more than $76.3 billion in loans, followed by Australia, which has closed $67 billion in loans so far in 2014.

The largest loan-backed M&A deal so far this year was closed in China, where a $6.9 billion loan supported Hong Kong-listed, Melbourne-headquartered miner MMG’s purchase of the Las Bambas copper mine in Peru from Glencore Xstrata in April, according to Thomson Reuters.