Asia Pacific M&A deals may peak at US$750b in 2019

The revival in Chinese investment is set to boost regional deal activity.

Although Asia Pacific M&A transactions for 2017 are forecasted to fall short of last year’s deals dragged by a slowdown in Chinese outbound acquisitions, it may just be on its way to its peak level in 2019 with an expected US$750b in total deal proceeds, according to Baker McKenzie. 

The slowdown in Chinese outbound acquisitions dealt a huge blow to regional M&A activity in 2017 after recording a 30% YoY decrease to an estimated US$118b in the first three quarters of the year. 

However, Baker McKenzie forecasts that the conditions are set for the partial revival of Chinese investment as macroeconomic restrictions gradually ease and the government implements its Belt & Road project.

The revival is projected to significantly boost the region’s M&A activity to rise from $534b in 2017 to a forecasted US$710b in 2018 which Baker McKenzie forecasts to peak at US$750b in 2019.

Additionally, the trend of domestic deals outpacing cross-border listings will continue onwards to 2020 as Asia Pacific domestic IPO proceeds are expected to grow to US$55b in 2017 from last year’s US$47b. 

China accounted for more than a half of the total with over US$30b contribution.

“Looking ahead, Asia Pacific domestic IPO activity should accelerate in the next two years, reaching a cyclical peak of $82 billion in 2019,” said Baker McKenzie, adding that tech and telecom are expected to be key growth drivers next year. 

Cross-border listings, on the other hand, recorded a lacklustre performance in 2017 with total proceeds at US$40b which largely originated from deal activity recorded in the second half of the year. 

Nevertheless, Baker McKenzie expects cross-border listings to rally to US$66b in 2018 with the Hong Kong Stock Exchange snapping the lion’s share of listings followed by the New York Stock Exchange.