Asia M&A Forum: meet the speakers

Lawyers and dealmakers from Morgan Stanley, AIG, JP Morgan and Allen & Overy speak to IFLR on trends, predictions and what keeps them busy ahead of our Asia M&A Forum.

For more information on the forum, to view the agenda, or to enquire about attending, please contact Umy Ng on umy.ng@euromoneyplc.com or +852 2842 6931.

The Chinese M&A market is slowing down.

Key areas that had been hot for China’s private equity in the last 24 months, such as education, are not going anywhere. That’s partly down to recent changes in the law, and partly because parties cannot agree on valuation.

We are seeing more and more interest in M&A insurance as buyers and sellers across Asia become aware of its value in helping to get their deals across the line. It proliferates the auction process, as buyers use M&A insurance as a means to differentiate their bids.

Historically, interest was driven largely by private equity, but we are seeing increasing appetite from trade buyers as their knowledge of the product has grown significantly in recent years.

We are writing policies across the region, but if I had to pick one market where we have seen particular growth recently, it would be South Korea, which is keeping us very busy at the moment.

JP Morgan’s 2019 Global M&A Outlook report suggests a continued resilience in the M&A market this year.

Companies are expected to continue to engage in M&A to drive growth and shareholder value, realising the benefits of unlocking value and refocusing on core assets through divestitures.

The deployment of capital from sources like pension funds, sovereign wealth funds, family offices and infrastructure funds will continue to stimulate the M&A market and increase competition between potential acquirers, leading to high asset values.

My market is Asia-Pacific as a whole, but I’m especially focused on the technology sector.

We are seeing more outbound interest from China, with a lot of capital flowing into southeast Asia. Chinese internet companies in particular are expanding their presence via investments, as well as building out organic platforms. US investors are also increasingly interested in east Asian technology companies.

We are seeing a lot more action in India and Thailand. India is a difficult market for US-based general partners – not many of them have made money in this market, and there are potential corruption issues. For a small Indian deal, the effort and due diligence cost involved could be considerably more than what is spent on a similar Chinese deal.

At AIG we underwrite a lot of deals. We were the first insurer to write M&A insurance in Asia and have an APAC M&A team of 10, with underwriters based in Hong Kong, Singapore, Tokyo, Sydney and Melbourne.

It typically takes us five to 10 business days to underwrite a deal – though it can be much quicker if it needs to – and at any given time, our underwriters will each be working on up to five or six transactions. At the moment I am busy with deals in Singapore, Korea, Hong Kong, Australia and New Zealand.

We work closely with corporates, private equity funds and M&A market practitioners to provide escrow solutions at various transaction stages – pre-closing, closing and post-closing – for complex, cross-border M&A transactions to help transaction principles mitigate risks in a cost-effective, time-efficient way.

I spend most of my time working on tech sector-related matters.

That includes advising on collaborations between non-tech and tech companies via commercial agreements and joint ventures, and helping incumbents in existing industries deal with disruption. This can involve a range of different transaction types, all centred on the theme of digitisation.

The above observations are likely to continue in the next 12 months: India and Thailand will continue to grow, and valuation issues will remain a problem.

If I was any good at these, I’d have retired by now! I think we at AIG will continue to see increasing interest in and understanding of M&A insurance as a deal facilitator, and plenty of deals getting done.

We also expect to see specific tax policies as a growth area. There is plenty of uncertainty surrounding the global economic outlook: IMF cutting global growth forecasts again, international trade tensions, China’s economic slowdown, Brexit, and a cooling Aussie real-estate market. Yet we continue to experience strong demand for the product, and expect this trend to continue.

As M&A markets develop in Asia and as clients get more sophisticated in their deal structures, our escrow team is seeing a growth in appetite. We expect that to continue.

There are two big themes playing out regionally: payments and e-commerce.

We are also seeing more fintech businesses from jurisdictions like Indonesia. Chinese fintech companies’ funding rounds are getting bigger, and I think we will see more Asian unicorns outside of China.

In the past 12 months, collaborations in particular have grown, with a big rise in complex joint ventures between incumbents and newer tech companies.

IFLR's Asia M&A forum

Marco Chung, Will Gibson, Ying Liu and Connell O’Neill will all be speaking at IFLR’s Asia M&A Forum on March 6-7 in Hong Kong, along with many others. For more information on the forum, to view the agenda, or to enquire about attending, please contact Umy Ng on umy.ng@euromoneyplc.com or +852 2842 6931.