SINGAPORE (Sept 24): Overall Singapore mergers and acquisitions (M&A) activity reached US$54.3 billion ($74 billion) so far this year, down 18.5% after a strong period in the first nine months of 2017 (9M17), but still elevated compared to historical levels, according to a preliminary review by Thomson Reuters data.

Average M&A deal size for disclosed deals also dropped to US$113.4 million from US$129.1 million in 9M17.

In 3Q18, deal activity in Singapore came up to US$12.9 billion, 53.9% lower than 2Q18 and 66.1% lower than 3Q17.

Cross-border deal activity saw a 41.0% drop to US$27.6 billion from US$46.8 billion last year. Inbound M&A activity also declined by 68.1% y-o-y in deal value.

Domestic M&A activity stood at US$6.0 billion, a 39.1% decline in deal value from 9M17, despite an increase in number of domestic transactions by 1.2%. Real Estate (58.0 %), Industrials (13.2%) and Financials (10.6%) sectors accounted for a combined 81.8% market share of Singapore’s domestic M&A activity.

However, outbound M&A activity increased 13.7% y-o-y.

Completed M&A deals involving Singapore amounted to US$50.4 billion for 9M18, a 13.1% decline in value compared to US$58.0 billion the same period a year ago.

Among the overall M&A transaction, the real estate sector took the lead and accounted for 32.0% of the total market share worth US$17.3 billion. This was however 48.3% lower y-o-y in terms of deal value.

The materials sector saw M&A activity increase significantly, with a market share of US$5.8 billion from US$1.1 billion in the previous year, reporting the highest first nine months period since 2008.

This was driven by Temasek’s pending agreement to raise its stake in German organic chemicals manufacturer Bayer AG, worth US$3.7 billion. This deal is currently the biggest transaction involving Singapore so far this year.

Buyside Financial Sponsor M&A activity in Singapore saw US$2.3 billion worth of deals so far this year, almost unchanged in terms of deal value compared to the same period last year. Number of private equity-backed deals, however, grew 14.3% from a year ago.

In addition, foreign acquisitions targeting Singapore-based companies have dropped by 68.1% y-o-y to US$9.9 billion in deal value, the lowest 9M since 2014.

The high technology sector accounted for 25.5% of Singapore’s inbound M&A activity, totalling US$2.5 billion.

Outbound M&A in Singapore stood at US$17.7 billion in 9M18, 13% higher y-o-y and the highest 9M since 2014.

Real estate industry is the most targeted sector thus far, capturing 35.2% of Singapore’s outbound activity, with US$6.2 billion worth of deals. Germany is also the most targeted nation for Singaporean overseas deals in terms of value, accounting of 23.2% of market share. This was driven by Temasek’s acquisition of Bayer.