M&As in PH cautious mode

- Advertisement -

Investors in the Philippines are more cautious in selecting the deals to pursue but experts see  activities and interest in the mergers and acquisition (M&A)  in technology, financial services, healthcare, food, and renewable energy sectors.

This was the comment of Noel  Rabaja, Strategy and Transactions Leader of SGV & Co., partner of EY which released the analysis on M&A data yesterday.

“In the Philippines, we are likewise challenged by elevated inflation, increasing interest rates, and the same global geopolitical and financial headwinds affecting the rest of the world.  Against this backdrop, it is normal for investors to be more cautious in selecting the deals to pursue,”  Rabat said.

- Advertisement -

EY data showed global M&A in the first half has been resilient, with 2,274 deals of a total value of $2 trillion.

This may be down 27 percent by value and 18 percent by volume, but activity is up compared to the average of the last M&A cycle, up 35 percent and 13 percent, respectively).

According to analysis by EY, the nature of cross-border deals is changing to reflect geopolitical tensions on the world stage. While cross-border transactions levels in the first half have decreased 24 percent in 2022 versus an average of 30 percent over 2015-19, the share of cross-border deals among closely affiliated countries has increased (51 percent in 2022 compared to an average of 42 percent over 2015-19).

Across Asia, there has been a slowdown in M&A activity with 534 deals worth around $84 billion, compared with 758 deals worth $97 billion in first half of 2021.

Kah-Loon Mah, CEO at Ernst & Young Corporate Finance Pte. Ltd., said

the slowdown in M&A activity in Southeast Asia is likely due to the impact from the rising interest rates, global inflation and supply chain disruptions, geopolitical headwinds, surging oil prices and the shortage of skills and manpower in certain sectors.

“I do not think that M&A activities are being curtailed or are being put on hold at present. Instead, companies are becoming more discerning; in fact, many are still exploring investment opportunities, but with greater care,” Mah said.

 

Author

- Advertisement -

Share post: