Which market sectors have been particularly active recently?
Mergers & Acquisitions
The most active sectors in the first half of 2016 were real estate, industry, technology and banking. In addition, buy-outs of companies or parts of companies in the course of insolvency proceedings formed a significant part of recent M&A deals. It is to be expected that the consolidation of Austrian banks will lead to further M&A activity.
Recently, Austria has seen more purchasers aiming for public-to-private transactions. Typically, the purchaser launches a voluntary takeover bid aimed at acquiring a controlling interest, conditional upon the acceptance of shareholders holding at least 90% of the company's shares.
The (re)insurance sector has been particularly active over the past two years. This was largely a result of insurance groups seeking to consolidate but targets have been acquired by parties looking for a way in which to access Bermuda’s (re)insurance market by gaining control of an established brand.
Infrastructure is, by far, the sector where most of the activity is happening because of the combination of several different factors. The Lava Jato (car wash) corruption scandal (which affected most - if not all - the major Brazilian infrastructure conglomerates) dried the debt and equity capital markets for those involved in a time where the backlog of projects - and hence funding - was huge. That forced the market to turn to the next best way to access funding - M&A. There are many ongoing mandates on the street and one can safely say that this is a very active industry these days. The healthcare industry is also worth noticing as a safe bet, in particular due to the recent lifting of the restrictions to foreign investors in equity.
British Virgin Islands
The most active sectors include IT, media and telecoms. Significant deals in the first half of 2016 included the acquisition of China’s CITIC Real Estate and BVI-incorporated Tuxiana Corporation by Hong Kong’s China Overseas Land & Investment.
The technology, media and telecommunications (TMT) sector continues to dominate deal flow, as executives and dealmakers acknowledge the transformative opportunities presented by tech. Non-tech buyers are also keeping an eye on the nascent fintech industry. Sectors like TMT will no doubt continue to offer new opportunities, even if the wider geopolitical and macroeconomic picture causes some to look very closely before they leap. Additionally, the financial services and pharma, medical and biotech sectors saw solid deal flow.
ZL: According to our experience and observation of the M&A market, the active sectors of the domestic M&A market in recent years are mainly TMT, medical, education, etc. Compared to the traditional industry, TMT is a newly emerging industry, including technology, media, and telecom. We also noted that the service industries, including finance, medical and education, are also active.
During the past year or so, we have seen a wave of unusually large industrial transactions, both public and private, and fewer sponsor-driven buy-side deals. The notable large industrial transactions include the recently announced USD 8.6 billion acquisition by a consortium led by Tencent of a majority stake in Finnish mobile game maker Supercell, the EUR 700 million acquisition by Fortum Corporation of a majority stake in the leading Nordic circular economy company Ekokem Corporation and the divestment by Terex Corporation of its material handling and port solutions business to Konecranes Plc for a consideration of approximately USD 1.3 billion.
In addition to large-scale industrial transactions, specific sectors have remained particularly active. During the last year, these include e.g. energy and infrastructure and real estate, where we have recently seen some unusually large portfolio deals come true. Mobile gaming and related services are also emerging as an increasingly active sector in Finland and the Nordic region with the continued inflow of significant foreign venture capital investment.
Despite the immediate dip in stock market valuations, it appears as if the outcome of the Brexit referendum will not have along-lasting chilling effect on IPO exits. In line with the trend that has been prevalent in the Swedish market and supported by the still healthy stock market valuations, we have seen some successful sponsor-led IPO exits, including Nordic Capital’s listing of Tokmanni, a nationwide discount retailer, and Intera Partners’ listing of Consti, a renovation and technical services provider, both on the main list of the Nasdaq OMX (Helsinki). The smaller-cap First North list of the Nasdaq OMX (Helsinki) also remains reasonably active.
In Germany, mid-cap deals still form the biggest part of the total sum of M&A deals. Especially with respect to industries like automotive or chemicals the German M&A market is very strong. Another strong sector is the consumer sector. Unusual for the German M&A market, there was recently a significant increase in hostile takeovers.
On the basis of the aforementioned publicly available data at the high end of M&A activity, the sectors with the greatest M&A activity last year in Greece were the financial services and the pharmaceutical sector, as well as the energy and tourism sectors. Smaller M&A deals were closed particularly in the real estate, transportation and telecommunications.
The top 5 target sectors by volume in 2015 were financial and insurance activities, manufacturing, information and communication, construction and mining and quarrying. Within Guernsey financial services the fiduciary and fund administration sectors have been particularly active in recent years, and there has been and continues to be significant restructuring of banks.
Isle of Man
There has been recent activity within the financial services sector with considerable private equity investment into fiduciary businesses, takeovers involving life assurance companies and significant restructuring of banks in the Isle of Man.
Looking at the domestic M&A (In-In) market, activity reflects the realignment taking place in various industries in Japan. In particular, consolidation appears to be taking place among Japanese listed companies in the retail, oil, food and beverage, and financial industries. In outbound M&A, major Japanese insurance companies have recently been particularly active in large-scale acquisitions of foreign insurance firms. Investment in various technology venture companies has also been particularly popular recently.
Entering 2016, industrials, consumer and retain, TMT and the energy sectors have all shown the strongest momentum in the Norwegian M&A market.
By total number of transactions, real estate, finance and retail industries made up around 50% of all transactions in the market at the beginning of the year 2016.
By value of transactions during the same period, real estate represented around 30% of the entire volume of the market and the finance sector – around 25%.
The insurance sector is ripe for public M&A activity; there are over 36 insurance companies currently in operation within the Kingdom, and we would expect to see this as an area for consolidation in the near future. Sectors which involve cash businesses (such as retail, food, healthcare and beauty) and which are less reliant on Government funding, are also likely to become increasingly active and therefore of substantial interest to investors.
The Kingdom's oil and petrochemicals market remains a focus of attention, and industries affiliated to those markets are looking to participate in a greater number of corporate transactions. The Kingdom's Public Investment Fund recently invested in Uber Technologies, noted as the largest deal with Middle Eastern involvement in the first half of 2016, and shows a growing interest by the Kingdom in the technology sector, though whether this translates into domestic activity remains to be seen.
Retail has been active, the largest transaction being the acquisition by Berli Jucker of Big C Supercentres through the negotiated acquisition of a controlling stake and subsequent tender offer. Other major transactions have included WHA Corporation’s acquisition of Hemaraj Land, in the logistics, warehouse and industrial estates field, and the low oil price has given rise to activity in the energy and renewable energy sectors. Real estate and real estate related transactions (hotels etc) are common.
The last two years have seen a number of voluntary bids being made in relation to publicly-listed companies. The most recent public offer resulted in the acquisition of a significant stake in GO plc, one of Mata’s major telecommunications providers. Other recent bids involved the merger of two significant players in the Maltese hospitality sector and the merger of a Big Four firm with an IT and e-commerce company. The private sphere has witnessed the setting up of structures incorporating special purpose vehicles and the use of these entities as acquisition vehicles or targets in international transactions.
The technology, media and telecommunications sector was particularly active in the first half of 2016, accounting for 22% of all announced transactions by deal count. The pharmaceutical, medical and biotech sector accounted for 11% of all announced transactions by deal count, including the two biggest deals announced in the first half, Shire’s proposed $35.2 billion acquisition of Baxalta and Abbott’s proposed acquisition of St. Jude Medical for $29.9 billion. The energy sector has continued to be active, with some segments (such as a power and utilities) very strong, while other segments (such as midstream) have been weaker than 2015. There continue to be significant levels of activity across a number of sectors, including general industrials and consumer products.
During 2016 to date, the following sectors have experienced a high level of M&A activity in Vietnam:
- real estate;
- wholesale and retail distribution;
- pharmaceutical; and
Recently there have been some changes within the financial services sector with considerable private equity investment into fiduciary businesses and mergers between insurance companies, constructions companies and financial service providers.
The top 5 target sectors by volume in 2015 were financial and insurance activities, manufacturing, information and communication, construction, and mining and quarrying. In the local market, the trend of consolidation in the fiduciary and corporate services sector has continued.
The most active sectors in the past 12 months were IT, energy, real estate, services and pharmaceuticals/health care, representing about 50% of the M&A market. The sale of 45% of UniCredit Tiriac Bank was a notable deal, valued at more than EUR 700m.
Sectors which have been particularly active over the last 12-24 months include:
- strong activity in the energy sector – Vector’s $952 million sale of its gas transmission pipeline business to First State Investment Fund; and Z Energy’s $785 million purchase of Chevron’s New Zealand Caltex retail business;
- continued Asian interest in primary products – Shanghai Maling’s $261 million purchase of a controlling interest in Silver Fern Farms; and Sumitomo Forestry’s $370 million purchase of forests near Nelson;
- the return of Australian private equity funds – Pacific Equity Partners’ acquisition of Academic Colleges Group; Archer Capital’s acquisition of New Zealand Pharmaceuticals; and Pacific Equity Partners’ acquisition of Manuka Health New Zealand; and
- continued focus on the aged care sector – Blackstone’s acquisition of Lendlease Group’s portfolio of five retirement villages; Arvida’s continued expansion through the acquisition of seven retirement villages.
Although all market sectors have been less active in 2016 than they were in the previous year, the TMT sector has remained relatively resilient to date, buoyed by a handful of major transactions (a standout example of which was Softbank's acquisition of ARM Holdings).
The healthcare, business services and financial services sectors have also remained active during 2016, albeit not at levels experienced in the previous year. In contrast, the private equity market in the UK experienced a decrease in activity during the first half of 2016, mainly driven by uncertainty relating to BREXIT.
Regarding the Spanish market, Real Estate, Technologies and Finance & Insurance. Additionally, there has been a notorious increase in the investment on Energy, especially on renewable energies.
From our Deloitte Legal side, we have perceived active movements regarding infrastructure and hospitality sectors.