Southeast Asian investors on cross-border buying spree

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By Jeremy Grant in Singapore

State-backed investors from Singapore and Malaysia have driven the value of cross-border acquisitions in Europe and the Americas from southeast Asia to their highest level since before the financial crisis.

The value of outbound mergers and acquisitions from the region was up by 20 per cent so far this year at $26.1bn, compared with $21.7bn in the same period a year previously, according to Dealogic.

That was not far off a peak of $29.9bn in 2007, not long before activity all but evaporated as a result of the financial crisis.

The emergence of Temasek, Singapore’s state investment company and also GIC Private, the city-state’s sovereign wealth fund, as two of the biggest spenders signals a push by such cash-rich institutions to expand their global portfolios.

Dealogic’s data included plans unveiled this week by Pavilion Energy, a unit of Temasek, to buy a 20 per cent stake in a Tanzanian liquefied natural gas exploration block from UK-listed Ophir Energy.

Other types of investors include Malaysia’s largest pension fund, the Employees’ Provident Fund, which is part of a consortium including Och-Ziff Capital Management paying $1.2bn for a group of 12 hotels in the UK.

The EPF drew attention earlier this year when, as part of a Malaysian consortium, it bought the Battersea Power Station and surrounding land in London for $400m.

“It’s basically these big pension funds diversifying their portfolios and in Temasek’s case it has really decided to refocus on developed markets,” said Victoria Barbary, director at Institutional Investor’s Sovereign Wealth Centre in London.

Most of the top 10 investments were in oil and gas, chemicals and property.

Other investments were the $1.5bn acquisition, including debt, of MSR Resort Golf Course, a group of US hotels, by GIC and the acquisition of a 5 per cent stake in Spanish oil group Repsol by Temasek.

The biggest deal was the almost $1.7bn acquisition by Singapore-listed Del Monte Pacific of the canned food business of private equity-backed Del Monte Foods Consumer Products, gaining the Asian business a presence in the US market.

Tay Ee-Ching, head of M&A for southeast Asia at JPMorgan in Singapore, said that while many of the deals had involved “the more institutional side of the buyer equation”, companies were also doing more deals outside their domestic market.

Some of the largest are family-run, listed conglomerates, including Astra International and Salim Group; YTL Corporation, a Malaysian utilities-to-hotels group that also owns Wessex Water in the UK; and Thai agribusiness giant Charoen Pokphand, headed by Dhanin Chearavanont, one Thailand’s richest men.

This year another Thai billionaire, Charoen Sirivadhanabhakdi, won control of Singapore-listed Fraser and Neave, a property-to-drinks conglomerate that significantly expanded his empire outside Thailand.

“A lot of these type of companies are very ambitious about going regional or international. That’s the theme we’ve been sensing for the last 12 months,” Ms Tay said.

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