Transaction volumes continue to trend at high levels across the region. The chart below shows deal announcements this year (annualised) compared with the average since 2006:
One market stands out in particular: (more…)
The figure below shows the cancellation / completion ratio of Asia-Pacific deals going back twenty years. The chart shows how this year has been a huge outlier, with the ratio moving well above two times, compared with a historical range rarely exceeding one. In other words, in 2020, more than two deals have been cancelled for every deal that has completed. This indicates the scale of the disruption in the M&A space this year.
M&A cancel / complete ratio (x)
What does this imply for M&A investment returns for the rest of the year? We think they will be strongly positive for the following reasons: (more…)
- Earnings are falling precipitously. Acquirers are calling off deals by invoking Material Adverse Change (MAC) clauses. Many transactions have either broken or widened out to spreads of 30% to 70%.
- Even less-risky deals are seeing much wider spreads due to forced de-leveraging. For example, we saw annualised returns in Japan which have been around 2-3% for months blow out to 40%+ at one point.
The disruption in the M&A space has been more severe than during the GFC, as this time the correction has been stunningly abrupt. (more…)
A frequent topic of conversation was the upcoming abolition of Dividend Distribution Tax (DDT), which is significant for holding companies. (more…)
We are pleased to announce that Curtis Man is joining the team as an Executive Director in charge of investor relations and business development. Curtis was most recently an Executive Director at Pinpoint Asset Management in Hong Kong. Previously he was at LFCC Management and UBS Securities Asia. He has a degree from the Chinese University of Hong Kong.