PETALING JAYA – Malaysian mergers and acquisitions (M&A) and initial public offerings (IPOs) are forecast to climb over the next two years and peak in 2019, before easing back in 2020.
Wong & Partners, a member firm of Baker & McKenzie International, said in the third edition of the Global Transactions Forecast that IPOs will rise to US$2.74 billion (RM11 billion) in 2019.
The forecast predicts the number of M&A deals to rise to 390 in 2018, from 255 this year, with the value of these deals jumping from US$6.1 billion in 2017 to US$13.1 billion in 2018, and US$15.2 billion in 2019.
“After a few soft patches in 2017 we have a more optimistic outlook for the global economy and deal making in 2018, as long as the brakes are not put any further on global free trade,” Baker McKenzie’s global chair Paul Rawlinson said.
“We see an uplift in both M&A and IPO activity as deal makers and investors gain greater confidence in the business prospects of acquisition targets and newly listed businesses,” he added.
Additionally, the forecast said the easing of key economic and political risks as well as the emergence of positive macroeconomic deal drivers will accelerate global deal activity in 2018, after a period of apprehension for global deal makers earlier this year.
Following on the momentum created in recent months, the forecast, developed in association with Oxford Economics, predicts the global deal cycle to peak next year, while Malaysia and the wider Asia-Pacific region are set to peak a year later.
According to Oxford Economics, gross domestic product growth in Malaysia has accelerated to 5.6% in 2017, 1.5 percentage points faster than in 2016, largely because of increased government support for household spending.
“Alongside major government infrastructure investments and the solid outlook for world trade, conditions support a rebound in deal activity,” it said.
Commenting on the report, Wong & Partners head of corporate, commercial & securities Brian Chia said while the forecast numbers prepared by Oxford Economics are quite bullish, the firm does see a definite pick-up in interest around deal making in Malaysia, both domestically and by foreign investors.
“Macro-economic conditions are set to remain favourable, and Malaysia is well positioned at the heart of Asean.”
Overall, the forecast predicts Asia-Pacific’s M&A activity to peak at US$754 billion and domestic IPOs at US$82 billion in 2019.