PROPERTY RANKS as the third largest sector for mergers and acquisitions when their asset are higher than market value, according to a recent survey by market strategy consulting firm Solidance Thailand.
The research found that Thailand’s mergers and acquisitions (MA) activity had remained resilient over the past few years.
The survey learned that between 2015 and 2017, the average transaction increased by 21 per cent from US$39.7 million (Bt1.29 billion) to $48.2 million (Bt1.56 billion) while transactions larger than $400 million (Bt12.96 billion) also increased by the compound annual growth rate (CAGR) of 5.5 per cent, signifying a surge in M&A deals in Thailand. In terms of industry breakdown, consumer discretionary and staples represented the largest sectors for both deal volume and value, followed by industrial and material sectors between 2015-17. They are still seen as promising sectors with potential to grow in 2018.
As of the first quarter of 2018, Thailand’s M&A transactions reached $2.2 billion over a total of 57 deals. Some 37 per cent of M&A transaction value in the first quarter of this year occurred in the consumer discretionary sector, followed by energy (34 per cent) and real estate (14 per cent), respectively.
This figure is lower by almost half in terms of volume and value compared with Thailand’s first quarter of 2017. However, the country’s by strong GDP growth and rising FDI inflows should improve M&A growth opportunities in 2018 and are expected to reach similar levels to 2017 or higher, the research found.
One major M&A deal of note from early 2018 was the energy-sector acquisition of Bongkot Project by PTTEP International Ltd valued at $750 million. Some 85 per cent of the M&A transaction value in early 2018 was from domestic investments resulting from a recovery of exports in the industrial sector.
Backed by a manufacturing-driven economy, Thailand is also perceived as an emerging manufacturing hub as well as a global destination for tourism. Moreover, the government’s commitment to invest and foster a business scheme in the Eastern Economic Corridor is expected to further stimulate market opportunities. Thailand will remain an attractive stage for domestic, outbound and inbound M&A deals, which should reach its peak in 2020, according to the report.
The report also said that consumer discretionary and staples, energy and real estate sectors have been promising sectors and would continue growing in 2018, given the increasing regional consumption spending and the recovery of Thailand’s exports.