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27May

Current trends in Asia-Pacific M&A

By |27 May 2020|Categories: Newsletter|

We look at the current opportunity set in Asia-Pacific M&A, and how it has changed since the onset of the pandemic.

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…)

3Apr

A perfect storm

By |3 April 2020|Categories: Newsletter|

The Covid-19 crisis has created a perfect storm for global M&A:

  • 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…)

5Mar

Dividend distribution tax and holding companies in India

By |5 March 2020|Categories: Newsletter|

We had a productive trip to India this month, meeting the management and directors of our portfolio companies, their operating subsidiaries, sell-side analysts, journalists and investors.

A frequent topic of conversation was the upcoming abolition of Dividend Distribution Tax (DDT), which is significant for holding companies. (more…)

4Mar

Welcome Curtis Man

By |4 March 2020|Categories: Metrica news|

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.

6Feb

The case for tailored relative value

By |6 February 2020|Categories: Newsletter|

Relative value is a strategy that has, over the years that we have followed it starting in 2007, generally performed well and has produced returns uncorrelated with other strategies and with the broader market. However in last two years the strategy has started to perform poorly for investors. What is the cause?

The figure below shows is an 18-year chart of the MSCI AC Asia ex-Japan Growth and Value indices. Growth tracked Value very closely over the entire period up to 2017. Since then, Growth has significantly outperformed.

MSCI AC Asia Pacific ex-Japan Value and Growth indices, 2002 to present

Why is this? (more…)

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