SINGAPORE (Dec 19): Overall mergers and acquisitions (M&A) activity in Singapore saw a 30.7% drop in 2018 to US$66.2 million, compared to a record period in 2017, according to research conducted by Refinitiv.

Also, the average M&A deal size for disclosed deals dropped to US$97.7 million from US$129.1 million a year ago.

In 4Q18, M&A deal activity came up to US$12.4 billion, 29.1% lower than 3Q18 and 58.5% lower than 4Q17.

For cross-border M&A activity, deals were 44.2% lower at US$36.1 billion this year, compared to US$64.7 billion last year.

Singapore’s inbound M&A activity fell 68.3% in deal value from over a year ago, while outbound M&A activity slipped 2.9% in value from last year.

Within Singapore, domestic M&A activity saw a 37.7% drop to US$8.7 billion in deal value compared to the same period a year ago. This was despite a 3.0% increase in total number of domestic transactions.

Real Estate (43.8 %), Telecommunications (16.0%), Financials (10.3%) and Industrials (10.2%) sectors accounted for a combined 80.3% market share of Singapore’s domestic M&A activity.

So far this year, completed M&A deals involving Singapore totalled US$63.3 billion, 22.3% lower than US$81.5 billion in the previous year.

The Real Estate sector took the lead and accounted for 31.0% of domestic and cross-border market share worth US$20.5 billion in 2018, 53.9% lower in terms of deal value from 2017. M&A activity targeting the High Technology sector totalled US$7.21 billion, a 10.5% increase compared to last year (US$6.5 billion) and saw the highest annual period since 2014 (US$9.4 billion).

Meanwhile, the materials sector captured 10.8% market share and totalled US$7.17 billion, and saw the highest annual volume in a decade after a 380.7% increase in value. This was driven by Temasek Holdings’ pending agreement to raise its stake to 4% in Bayer AG, worth US$3.7 billion, in a privately negotiated transaction. This deal is currently the biggest transaction involving Singapore so far this year and the second largest Singaporean deal on record targeting the materials sector.

Buyside Financial Sponsor M&A activity in Singapore saw US$3.1 billion worth of deals so far this year, a 61.1% decline in deal value compared to 2017. But the number of private equity-backed deals increased by 18.6% y-o-y.

On the other hand, foreign acquisitions targeting Singapore-based companies reached US$13.0 billion so far this year, a 68.3% decline in deal value compared to last year. This is the lowest annual period since 2013.

The high technology sector accounted for 24.6% of Singapore’s inbound M&A activity totalled US$3.2 billion, an 18.6% drop from the previous year. This was driven by China’s Alibaba Group Holding that planned to raise its interest in Lazada South East Asia, for a consideration of US$2.0 billion, in a privately negotiated transaction.

With this deal, China emerged the most active acquirer in terms of deal value, capturing 32.5% of Singapore’s inbound activity.

This year, Germany is Singapore’s most targeted nation for overseas deals in terms of value, accounting for 17.8% of market share, drive my Temasek’s US$3.7 billion additional stake acquisition in Bayer AG.

However, overall Singapore outbound M&A activity was down by 2.9% y-o-y to US$23.1 billion this year.