SINGAPORE (June 24): The total value of merger and acquisition deals involving Singapore entities surged in the first half of this year, boosted by what is by far Singapore’s largest deal ever: the sale of Global Logistic Properties’ US logistics assets to Blackstone Group for US$18.7 billion ($25.4 billion). In total, some US$59.4 billion worth of M&A deals were transacted in the first half of this year alone. That is 64% more than the same period the year before, according to data from Refinitiv. However, investment bankers collected lower fees during the period. According to Refinitiv, total fees fell 16% y-o-y to US$366.3 million.
The mega M&A deals were mostly in the real estate sector, accounting for 67% of the value of the deals. The technology sector was a distant runner-up with just a 7.9% share and the industrials sector third with 5.2%.
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Apart from the Blackstone transaction, CapitaLand’s US$7.9 billion acquisition of Ascendas-Singbridge also helped lift the numbers. Shareholders of CapitaLand have given the green light for the deal, which, when completed, would be the largest domestic Singaporean deal on record. It surpasses the takeover of Overseas Union Bank by United Overseas Bank more than a decade ago.
Other significant real estate deals include China Everbright’s acquisition of a 30% stake in Ying Li International Real Estate for US$2.66 billion. The fourth-largest deal was the planned acquisition of OUE Hospitality Trust by its sister entity, OUE Commercial REIT. This deal, part of a series of asset reshuffling by Indonesia’s Riady family, is worth US$1.66 billion.
In February this year, JD.com, a leading Chinese logistics player, in conjunction with GIC, Singapore’s sovereign wealth fund, set up the JD Logistics Properties Core Fund. The fund was then used to buy a portfolio of logistics assets from JD.com for US$1.63 billion, making it the fifth-largest M&A deal involving Singapore entities in 1H2019.
Despite uncertainty over the strength of the global economy, the equity market in Singapore was able to maintain some semblance of health. In 1H2019, local equity and equity-linked proceeds raised reached US$2.9 billion, down 5% y-o-y. While the Singapore Exchange has seen more than US$1 billion in new capital raised from the string of IPOs so far, the bigger issues were not Singapore-based entities but two US-based trusts: Eagle Hospitality Trust and ARA US Hospitality Trust.
IPO proceeds raised by Singaporean companies for 1H2019 totalled US$99.3 million, down 81.2% y-o-y. That marks the lowest amount raised during comparable periods, since 2015. However, secondary fund raising was considerably more buoyant. In 1H2019, total follow-on offerings hit US$2.7 billion, up 47.7% compared with 1H2018. The amount raised marked the strongest period since the 1H2013.
Despite a slew of issues by public sector agencies, primary bond offerings from Singapore-domiciled issuers declined 19.9% y-o-y in 1H2019 to US$15.5 billion after a record start in 2018.
During 1H2019, Singapore financial institutions issued US$7.4 billion and captured 47.4% of the market share. However, two Singapore dollar-denominated bonds by the Land Transport Authority topped the charts in terms of individual size. The first was for US$1.1 billion and the second, US$1 billion.
In line with the lower quantum of bond issuances, investment bankers earned just US$89.3 million worth of syndicated lending fees — a three-year low — down 22.8% y-o-y. Underwriting fees for debt capital markets were down 8.4% y-o-y to US$92.9 million. Advisory fees for completed M&A deals were just US$76 million, a 49% y-o-y fall from 2018’s US$148.9 million. Equity capital markets’ underwriting fees, on the other hand, increased 55.6% y-o-y to a 10-year high of US$108.1 million, says Refinitiv.
