2024 kicked off with optimism amid expectations of global interest rate cuts that could lead to corporate actions, especially Mergers & Acquisitions (M&A). This optimism faded slightly in the second half of 2024 due to consistently high inflation rates that forced central banks to maintain interest rates, even in some countries to maintain a tight monetary policy through interest rate hikes.
These conditions impacted the M&A activities in Asia Pacific, as reflected in the 23% year-on-year (yoy) decline in M&A volume in the region and a 35% yoy decline in deal value in the first half of 2024, according to a PwC report. This decline was triggered by various factors, including: persistently high interest rates, geopolitical tensions, and a slowdown in the regional economy.
However, a different situation occurred in Southeast Asia. Driven by strong economic growth, a growing young population, and a business-friendly environment, M&A activity actually flourished, particularly in Singapore, Indonesia, and Vietnam. In addition, the strategic location of these countries also plays an important role in attracting investment.
Sectors such as technology, banks, consumer goods (especially food and beverage), and green energy have become the main targets of the M&A deals in a bid to expand market shares and improve corporates’ capabilities. These deals have the potential to forge stronger, more resilient companies, which ultimately could lead to higher economic growth in Southeast Asia.
Furthermore, the potential for M&A in Southeast Asia is also increasing with the advent of artificial intelligence (AI). AI has the potential to transform every stage of M&A, from identifying ideal targets and analyzing market trends to simplifying due diligence and generating accurate valuations. The presence of AI can streamline the complex M&A process. Several Southeast Asian countries are starting to leverage AI to gain a competitive edge and make timely and informed decisions during the transaction process. Companies that embrace this shift will be well-positioned for success.
M&A with Mandiri Sekuritas
In June 2023, Mandiri Sekuritas successfully completed the largest M&A transaction in the history of Indonesia's telecommunications sector, namely the spin-off and merger of Indihome and Telkomsel, subsidiaries of PT Telkom Tbk, valued at IDR78 trillion. In the spin-off, Telkomsel issued shares equivalent to IDR58.3 trillion to Telkom. This transaction increased Telkom's effective ownership to 69.9% and Singtel's ownership in Telkomsel to 30.1%.
Mandiri Sekuritas, along with Goldman Sachs, acted as Financial Advisor to Telkom in the integration that promoted fixed mobile convergence (FMC). This integration supports Telkom Group in meeting customer needs and creating synergies through the expansion of the customer network.
Meanwhile, in 2020, Mandiri Sekuritas played a crucial role in one of the largest M&A deals in banking history, acting as a consultant for Bangkok Bank's acquisition of Bank Permata, valued at an impressive USD2.7 billion. This deal transformed Bangkok Bank from a major player in Thailand with a strong Asian network into a robust bank with a significant presence in two key Southeast Asian economies, laying the foundation for sustainable growth.
Contact Mandiri Sekuritas for reliable advisory services and make Mandiri Sekuritas your trusted partner for a smoother and more confident M&A journey.