Thursday, August 22, 2019

Thailand in ‘robust’ emerging market category  with big jump forecast for M&A activity: report

Jan 07. 2019
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By The Nation

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Thailand is firmly in the ‘robust’ emerging-market category, with forecast M&A (merger and acquisition) activity of US$8.5 billion (Bt272 billion) this year, up from just $4.7 billion in 2018, and with the number of deals estimated to reach a three-year high of 125, before easing back in 2020.

This is according to the fourth edition of the “Global Transactions Forecast”, jointly issued by Baker McKenzie and Oxford Economics.

The report, based on forecast macroeconomic indicators from Oxford Economics along with insights from Baker McKenzie partners in 42 markets worldwide, projects that 2019 is likely to be a year of two halves. 

Several major transactions announced last year are set to complete in the first half, while underlying economic conditions should remain strong in Thailand throughout this period. 

However, macro drivers will cool the market through the latter half of 2020.

Oxford Economics, taking a somewhat bullish view of the country’s deal-making landscape in the year ahead, says in the report: “Thailand is expected to remain in good shape, with GDP [gross domestic product] growth projected to dip only slightly in 2019. This will encourage greater deal-making – particularly as investors discriminate more between vulnerable and robust emerging markets.”

Meanwhile, the value of capital to be raised through initial public offerings (IPOs) in Thailand this year is set to reach $4.3 billion, up from $2.3 billion last year, while falling back to 2018 levels next year.

The report also predicts global M&A value of $2.9 trillion for this year, down from $3.1 trillion last year, before falling to $2.3 trillion in 2020. 

With some major IPOs scheduled for 2019, total IPO proceeds are set to reach $232 billion, up from $220 billion last year, before dropping to $154 billion next year. 

In 2021 and beyond, with borrowing costs settling at their ‘neutral’ rates and equity markets enjoying better growth, the writers of the report see the potential for the start of a new upturn in both M&A activity and IPOs.

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