Malaysian M&As and IPOs expected to peak in 2019

PETALING JAYA: The value of local mergers and acquisitions (M&As) as well as initial public offerings (IPOs) is forecast to climb over the next two years with the deal-making cycle to peak in 2019 before easing back in 2020, according to the third edition of the Global Transactions Forecast, issued by Baker McKenzie International and Malaysian member firm Wong & Partners.

The forecast predicts the number of M&A deals to rise to 390 in 2018, from 255 this year, with the value of these deals jumping to US$13.1bil in 2018 from US$6.1bil this year, and $15.2bil in 2019. Meanwhile, the value of Malaysian IPOs could peak at US$2.74bil in 2019. Overall, Asia Pacific M&A activity could peak at US$754bil and domestic IPOs at US$82bil in 2019.

Following on the momentum created in recent months, the Global Transactions Forecast, developed in association with Oxford Economics, predicts the global deal cycle to peak next year, with Malaysia and the wider Asia Pacific region set to peak a year later.

The report shows that global deal activity will accelerate next year on the easing of key economic and political risks and the emergence of positive macroeconomic deal drivers after the period of apprehension for global dealmakers earlier this year.

Commenting on the report, Brian Chia, Wong & Partners head of corporate, commercial and securities, said: “While the forecast numbers prepared by Oxford Economics are quite bullish, we do see a definite pick up in interest around dealmaking in Malaysia, both domestically and by foreign investors. Macroeconomic conditions are set to remain favourable, and Malaysia is well positioned at the heart of Asean”.

According to Oxford Economics, “GDP growth In Malaysia has accelerated to 5.6% in 2017, 1.5 percentage points faster than in 2016, largely because of increased government support for household spending.

“Alongside major government infrastructure investments and the solid outlook for world trade, conditions support a rebound in deal activity. We forecast total M&A activity in Malaysia to rise in 2018 and 2019”.

“After a few soft patches in 2017 we have a more optimistic outlook for the global economy and dealmaking in 2018, as long as the brakes are not put any further on global free trade. We see an uplift in both M&A and IPO activity as dealmakers and investors gain greater confidence in the business prospects of acquisition targets and newly-listed businesses,” said Paul Rawlinson, Baker McKenzie’s global chair.

“However it’s not a done deal, with the threat of a hard Brexit and a Nafta collapse both still very real. Business will need to continue to make the case for liberal trade and investment frameworks.”