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Photo credit: geralt.

Singapore led the deal-making ranks in Southeast Asia, according to the Transaction Trail 2016 report by valuation and corporate finance advisor Duff & Phelps. The firm looked at deals across industries and recorded 800 transactions including mergers and acquisitions (M&A), private equity and venture capital (PE/VC), and initial public offerings (IPOs).

Together, they were worth US$88.1 billion. It’s a bit of a dip compared to last year’s deal total of US$103.8 billion although this year saw more deals – 800 against 2015’s 685.

Things looked upward in PE/VC deals specifically. Duff & Phelps recorded 100 transactions, collectively worth US$3.5 billion. That’s up from 2015’s 81 deals worth US$2.2 billion. In fact, the report shows 2016 saw the highest deal value and volume in the last five years for Singapore.

More deals, smaller deals

In the region, which for this report includes Singapore, Malaysia, and Indonesia, the total number of PE/VC deals was 160, worth about US$6.1 billion. All three markets saw a four-year high in both value and volume, relieving fears raised during the first half of 2016 that the region would fare worse this year compared to 2015.

There are more tech investment deals taking place in the region, although deal values are smaller.

The report found that the technology sector was the largest contributor to the region’s deal volume with 31 percent of the deal values. However, the top 10 deal list only features two tech startup transactions: the SoftBank and Didi Chuxing-led US$750 million investment in ride-hailing unicorn Grab (which tops the list, to be fair) and the KKR Group-led US$550 million investment in its rival, Go-Jek.

This means there are more tech investment deals taking place in the region, although deal values are smaller.

In terms of M&A and IPOs, while there is an upward trend in the region, there were no significant deals recorded in the tech sector. Perhaps the most notable exception to that is Alibaba’s blockbuster US$1 billion investment into Lazada.

Duff & Phelps Singapore managing director Srividya Gopalakrishnan points out that smaller companies now look to M&A as a strategy for growth – especially as the global economic slowdown makes it more difficult for businesses to grow organically. “[M&A] is a strategy that’s no longer for just the cream of the crop,” she says.

What 2017 holds

For the coming year, Duff & Phelps predicts current political uncertainties, increased regulatory requirements, and tougher scrutiny of cross-border deals could result in a more restrained market. However, it expects increased M&A activity in the region.

The firm thinks the tech sector is going to drive M&A and investment activity in 2017, although this will lead to “price corrections,” meaning valuation adjustments. Srividya doesn’t expect the kind of valuation drops that India saw, as the Southeast Asian markets are in a more nascent stage.

The report concludes the numbers look encouraging, even though global sentiment doesn’t. But this can lead to more activity both in M&A and in PE/VC. “In slowdowns, companies will look to inorganic growth options,” Srividya says. “M&A cannot slow down just because there is a slowdown in the market. And even in slowdowns, there is restructuring – which also drives transactions.”

This post Tech leads investment in Singapore, Malaysia, and Indonesia in 2016 despite slowdown appeared first on Tech in Asia.

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