Singapore Inc is stirring, with companies from real estate to engineering becoming bolder in their hunt for acquisitions abroad.
Companies in the city-state announced around $91bn of overseas deals this year through September, more than double the $41.9bn of transactions for the same period of 2017, data compiled by Bloomberg show.
Temasek Holdings Pte and GIC Pte still loom large, but increasingly others are inking their biggest-ever transactions to put Singapore on the world stage.
The flurry of activity shows a new determination by firms to adopt a more aggressive stance amid an escalating trade war between China – one of Singapore’s closest neighbours – and the US. An economy that’s forecast to expand next year at the slowest pace since 2016 is also putting pressure on companies to look further afield for growth.
“We’re certainly seeing a desire among Singapore Inc companies to globalise,” said David Biller, Citigroup Inc’s head of Southeast Asia corporate and investment banking. “Many of the next-generation leadership teams in these organisations are helmed by executives with multinational experience and they bring a focus on cross-border growth.”
CapitaLand, Singapore Press Citigroup is advising Singapore Technologies Engineering Ltd on a $630mn deal – the company’s biggest – to buy an aircraft engine components group from General Electric Co CapitaLand Ltd is in the process of acquiring a portfolio of multifamily properties in the US for $835mn in what is its largest overseas transaction since 2010.
Singapore Press Holdings Ltd, owner of the Straits Times newspaper, last month purchased some student accommodation in the UK for S$321mn ($234mn), its biggest foray abroad.
Keppel Infrastructure Trust is among bidders for Ixom, an Australian chemical firm owned by Blackstone Group LP that could fetch more than $1bn, Bloomberg News reported in August.
It’s not only the total value of deals that’s increasing. Singapore firms were involved in 468 transactions as buyer of foreign companies this year through September, an increase of 7.8% from the same period of 2017.
Globally, M&A activity rose 2%.
“Achieving organic growth in a relatively small market like Singapore is difficult, and building capabilities and scale will be increasingly important for corporates to stay relevant globally,” said Pankaj Goel, the co-head of Southeast Asia investment banking and capital markets at Credit Suisse Group AG.
China, and the expansion opportunities it presents, is proving a strong lure, according to Oriano Lizza, a sales trader at CMC Markets Plc. “Many Chinese companies have too much leverage and are selling off assets to strengthen their balance sheet,” Lizza said. “Being familiar with the region, Singapore companies are coming in and many do cut-price offers.”
Firms from Singapore have been involved in 68 acquisitions of Chinese companies so far this year. The volume of transactions jumped from $3.8bn the same period of 2017 to $19.5bn, Bloomberg-compiled data show.
By far the biggest investment in a Chinese company that involved a Singapore one was the $14bn capital injection in Jack Ma’s Ant Financial.
The financing, announced in June, included a US dollar tranche part-backed by Temasek and GIC.
Temasek’s other major transaction was its €3bn ($3.5bn) injection to help Bayer AG finance its planned takeover of US competitor Monsanto Co. GIC was also involved in Blackstone’s acquisition of a majority stake in Thomson Reuters Corp.’s financial and risk unit.
“The Singapore government has been encouraging companies for years to expand abroad to develop the country’s profile,” said CMC’s Lizza.“GIC and Temasek have been at the forefront of it.”
Temasek spokesman Stephen Forshaw said the group’s portfolio companies were independently managed and “Temasek doesn’t direct their business decisions.”