Despite a significant year-over-year (YoY) decline, fintech retained its position as the most active technology sector for mergers and acquisitions (M&A) in Southeast Asia in 2023.
This service, common in DealStreetAsia’s June 2024 SE Asia Tech M&A Review report, reflects the sector’s resilience and continued innovation.
The report, released in June 2024, highlights a sharp decline in M&A activity in the region in 2023. Although the number of M&A transactions in the fintech sector fell by 56%, the sector became the best performing technology sector, with 15 transactions recorded. for the year. This places fintech ahead of software and IT (14), marketing technology (12), human resources (HR) technology (8), e-commerce (7) and traditional financial services (7).
Notable M&A transactions in 2023 included the acquisition of insurance-technology company Singlife by Sumitomo Life Insurance Company at a valuation of US$1.2 billion. Another important transaction was that of Kasikorn Bank purchase of the Satang cryptocurrency exchange, valued at US$100 million.
M&A Tech activity in Southeast Asia
In 2023, overall technology M&A activity in Southeast Asia saw a significant slowdown, with total deal volume falling 34% year-on-year to 114.
This sharp decline is largely explained by a drop in domestic transactions. Acquisitions by domestic companies fell 49% year-over-year to 40 deals, significantly more than the 22% drop in acquisitions by foreign companies. Domestic acquisitions accounted for 35% of total tech M&A in 2023, the lowest share since at least 2018.
Singapore, which led foreign acquisitions in 2022 with 32 deals, saw a staggering 84% decline to five deals in 2023. Domestic acquisitions in Singapore also fell 63% year-on-year to 14 deals.
As a result, 74% of tech M&A in Singapore in 2023 (40 deals) were driven by foreign acquisitions, rising to over 52% in 2022.
The United States became the top foreign acquirer in 2023, overtaking Singapore by completing 18 deals in the region, up from 16 the previous year. China and the United Kingdom share second place with seven deals each, followed by Japan with six deals.
Among major Southeast Asian countries, Indonesia saw the largest decline in technology M&A deals, which fell 51% year-on-year to 23 deals. This decline aligns with the sustained decline in venture financing of more than 60% for two consecutive years.
Singapore, typically the largest contributor to tech M&A deals in the region, saw a 33% reduction in deal volume in 2023, to 54. Malaysia, which had maintained a steady flow of deals from 2020 to 2022, also saw a decline, with transaction volume down 38% to 13 in 2023.
Conversely, Vietnam was the only market in the region to see momentum in 2023, with total transaction volume increasing from five to seven in 2022.
Southeast Asia M&A Trends in 2024
In 2024, M&A activity continued to weaken in Southeast Asia, with total deal volume falling 34% year-on-year to just $22 billion in the first half, down from $85 billion dollars for all of 2023. according to to Elizabeth Lin, Head of Corporate Finance and Advisory at United Overseas Bank (UOB) in Singapore.
The number of transactions has also decreased significantly, with 300 transactions in the first half of 2024, compared to more than 800 in 2023.
However, the continued decline in interest rates should boost the appetite for mergers and acquisitions, Lin predicts. Additionally, regional economic growth is expected to reach 4.8% in 2024, up from 4.2% in 2023. This improved economic outlook is expected to revive interest in mergers and acquisitions and create favorable conditions for deal-making in the region, she said.
Lin expects sectors such as healthcare, infrastructure, telecommunications (including telecom towers and data centers) and renewable energy to continue to be drivers of M&A deals. Areas to watch include digital transformation, including artificial intelligence (AI) and other emerging technologies. Additionally, green technologies, fueled by change and environmental, social and governance (ESG) considerations, are expected to continue to play a leading role in renewable energy.
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