10 April 2020

Asia Pacific M&A slowdown fails to derail region's top deal advisers

Pic of Shanghai

Shanghai in January: cash-strapped companies may be forced to off-load assets

Freshfields, Allen & Overy and Cyril Amarchand all improve on 1Q19 performance

Freshfields Bruckhaus Deringer led the Asia Pacific M&A advisory rankings in the first quarter after it saw the value of its deals surge by more than five times even as wider activity crashed to its lowest level in seven years amid the coronavirus pandemic

Asia Pacific deal value, which excludes transactions in Japan, slumped 32% to $103bn, the slowest start to the year since 2013, according to Mergermarket’s 1Q20 M&A report. In China, which was first to be hit by the Covid-19 crisis—deal value tumbled 36% compared to the same period in 2019. 

Riccardo Ghia, research editor for APAC at Mergermarket, said: “Having regained some momentum in 4Q19 amid an unstable truce in the US-China trade war, dealmaking suddenly ground to a halt due to the coronavirus outbreak that originated in China and later spread to Japan and South Korea.”

Freshfields topped the ranking by deal value having advised on $13.2bn of transactions—up from just $2.5bn in the first quarter of 2019. Second place Allen & Overy worked on $12.6bn of deals, more than double what it clocked up at this point in the calendar a year ago, followed by Indian firm Cyril Amarchand Mangaldas ($12.2bn), Weil, Gotshal & Manges ($11.2bn) and Linklaters ($10.6bn). The latter three also saw deal value rise compared with the first quarter of 2019.

In addition to finishing third by deal value, Mumbai-headquartered Cyril Amarchand topped the rankings by deal count, advising on 35 deals — double what it worked on over the same period in 2019. It was followed by Indian peers Khaitan & Co with 19 deals, AZB Partners (16), Trilegal (15) and Shardul Amarchand Mangaldas & Co (14).

While the coronavirus impact is likely to disrupt M&A deal flow across the region in the coming months, Ghia reckons it might potentially lead to opportunities in China where cash-strapped companies could be forced to offload assets or merge to survive.

He said: “At the moment, companies are vying for emergency loans but equity injections are also to be expected. Transportation companies — in particular airlines — and tourism-related businesses will be among the most affected players by the current crisis and the pressure might result in growing consolidation.”

The pandemic had less of an impact in Japan in the first quarter, which saw deal value increase by almost two-thirds to $13bn, the best start to a year since 2016, Mergermarket data show. Kirkland & Ellis was the only non-Japanese firm to finish in the top five rankings by deal value, advising on $1.4bn of transactions.

Further reading:

Q1 global M&A suffers sharp fall as Covid-19 bites

Wachtell tops US M&A advisory rankings as Covid-19 pandemic halves Q1 dealmaking

Political uncertainty weighs on Latin America M&A activity in first quarter

Europe sees rise in M&A activity in Q1 ahead of expected Covid-19 slowdown

Wachtell, Sullivan and Kirkland top global M&A ranking after a near-record year for mega deals

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