M&A Activities in Singapore
Many corporate advisors are citing increasing merger and acquisition (“M&A”) activities in privatisations and reverse take-overs (“RTO”) due to better valuation and more realistic expectations. During the past 12 months, the total size of company takeovers stands at a staggering S$3.9 billion while a single privatisation deal accounted for S$186 million in the same period. Completed cross border deals champions the cause generating around S$5.4 billion through 121 transactions in the last 12 months. The cross border numbers fortifies the fact that Singapore remains a prime financial destination in the region.
“M&A activities in Singapore are still very vibrant! Despite equity markets in the region going through a correction phase, there are always opportunities for listed companies to consider through M&A, industry consolidation and corporate restructuring etc. For example, listed companies can even consider delisting and to restructure without the burdens of a listed company. After which, the said company can relist later to take advantage when equity markets recover,” proposed Robson Lee, Managing Partner of Gibson Dunn.
Listed companies have also not rested their laurels judging by their heightened activities in investor relations (“IR”) efforts and spending. “According to our IR survey, majority of companies that participated reported an annual IR budget of S$50,000 to S$100,000. Transactional IR is growing in importance over time. Our firm has assisted many projects in tandem with corporate advisors covering M&A, privatization and cross border transaction etc,” commented Ms Kathy Zhang, Group Managing Director of Financial PR Pte Ltd (“FPR”). The scope of an IR firm these days has grown beyond bridging the gap between listed companies and their shareholders. Today, the IR function has evolved from managing relationships with analysts to advising listed companies in their fund raising communication.
Understanding the nature of the deal in terms of the business, the legal risk and the financial impact is paramount in communicating the right message to the market, media and investors. To cite an example, many times we have seen misguided investors questioning a company’s recent acquisition via issuing new shares resulting in an earnings dilution. Therefore communicating the company’s rationale is key to a successful share placement exercise.
“It is important to engage the investment and media community proactively. With a strong belief in transparency and disclosure, we work with our investor relations team to communicate consistent key messages and positioning to the investment market. As a listed company, we strive to enhance shareholder value through capitalising the equity market. To that end, we recently completed a placement exercise where we forged a new partnership and raised S$11.6 million to grow our war chest to accelerate growth,” echoed Henn Tan, Chairman and CEO of Trek 2000 International Ltd.
Financial PR Team SG