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IMMEDIATE RELEASE
Report On Emerging Markets Deal Activity Spotlights Latest Sector Performance and Ranks, Cites Positive Longer Term Trends in Mining And Manufacturing.
Warsaw, September 10, 2008 - According to the DealWatch database, there were 3,839 M&A deals registered in the Emerging Markets in H1/2008, as of Aug 28. Compared to the respective period of 2007, the M&A activity increased by 34.4% y/y. However, the total deal value inched up by 2.2% y/y to reach USD 319.7bn in H1/2008. "The decline in deal value growth dynamics reflects lower pricing of companies being bought and sold, and lower expectations resulting from the situation on the stock exchanges", said Jakub Siekierzyński, head of DW M&A research.
The most active target countries in H1/2008 were: China (822 deals), Russia (690 transactions), Brazil (309), Ukraine (265), India (186) and Poland (161). The BRIC countries were among the most attractive markets. By comparison, the top six countries were the same for H1/2007, but in a different order. Last year, Brazil was on the sixth position, while the country managed to top Ukraine in H1/2008. The top two countries were also China and Russia in H1/2007.
On the other hand, the Emerging Markets were also among the top buyers in H1/2008. Again, BRIC countries dominated M&A activity with the only real competition being US investors. Top buyer companies were from China (710 transactions), Russia (656), Brazil (271), the USA (237), India (229), Ukraine (163) and Poland (160). Compared to H1/2007, the top two countries were the same, while Brazil advanced four positions from seventh position to third
More than 56% of the deals registered in H1/2008 were acquisitions of majority or controlling stakes. Compared to the respective period of 2007, the percentage increased slightly. There were 216 privatization deals registered in H1/2008, up by over 42% y/y. Most of them were carried out in the largest markets - the BRIC countries.
Negative impact of the poor equity market conditions in H2/2007 on ECM developments was clearly visible in H1/2008. Comparing with the booming performance in H1/2007, where 176 IPOs were held in Emerging Markets overall, H1/2008 saw a 25% y/y drop in the number of initial public offerings to 132.
As to M&A activity by sector, little has changed in H1/2008. Manufacturing remains the most dynamic sector for investments with 1,161 deals tallied, accounting for over 30% of the total deal number. However, this was a minor decline from the 34% seen in H1/2007. Ranked second in terms of deal volume was Finance and Insurance, which witnessed 446 deals in H1/2008. This accounted for 11.6% of the total M&A activity, slightly down from last year's 14.3%. While manufacturing was the most active sector, the financial sector witnessed some of the largest deals in H1/2008. Although not so active in the number of deals carried out, the Mining sector accounted for all the top three deals recorded in Emerging Markets in H1/2008.
"The data suggests the top sectors will remain popular in H2/2008 and beyond. Also the biggest markets will be responsible for the largest portion of M&A activity in the second half of the year. The country which we see advancing most aggressively in the ranking is India, which seems to have acknowledged the global M&A developments. Swelling M&A activity in the country is already noticeable" commented Jakub Siekierzynński.
The DealWatch report is available to subscribers of the DealWatch service.
