How are companies viewing M&As and IPOs in this environment?

The US "excelled" in IPO activity while the Asia-Pacific region showed "signs of recovery". Southeast Asia, in particular, saw IPO volume and value decline y-o-y with 27 listings raising US$0.7 billion in 1Q2025, down from 37 IPOs raising US$0.8 billion in 1Q2024. Europe, the Middle East, India and Africa (EMEIA) remained steady.

Chiam Tao Koon, director and head of Ashurst ADTLaw's M&A practice for Southeast Asia. Photo: Ashurst ADTLaw

"[The] global and regional M&A market now is in a temporary standstill pending some kind of resolution or stabilisation of the geopolitical and tariff situation," says Chiam Tao Koon, director and head of Ashurst ADTLaw's M&A practice for Southeast Asia.

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While there is still "very strong momentum", Chiam notes that deal makers will still need time to digest the current situation to have a clearer understanding of any immediate impact and knock-on effects. "Part of the problem now is that no one wants to be caught out if the knock-on impact is far more severe than they expected," he says.

Jason Saw, group head of investment banking at CGS International Securities, observes that surplus capital is now widespread across the market. "I think there's a lot of money around. It's undeniable," he says. "Let's just look at [the] Singapore banks. Everyone is flush with capital, giving extra dividends. [There is] speculation [in the] news that they're going to buy regional banks. So that's really the sign of the market."

Chiam agrees, highlighting geopolitical instability and US tariffs as the primary headwinds for M&A activity in 2025. However, he points to the "unprecedented amount of dry powder" in the region as a key driver for investment. "The lack of investment activity in 2023 and 2024 has [also] developed pent-up energy for 2025 and beyond." Even though liquidity is not an issue, people are taking a pause, which may take a couple of months to assess whether the US tariffs will have any real impact on their businesses, he adds.

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Saw is well placed to comment, having met with around 150 to 200 companies across the region year to date, as of the interview on April 17. He also believes infrastructure, green energy and healthcare will be the key sectors to watch.

Healthcare, in particular, may see more interest in both M&As and listings. For instance, Sunway's healthcare arm, Sunway Healthcare Group (SHG), was reported in January to be eyeing a listing by the end of FY2025 or early FY2026.

Saw adds that several hospitals are either seeking privatisation or pursuing bolt-on acquisitions with plans to relist in the future. One example is Catalist-listed Econ Healthcare, which received a privatisation offer in February. The offer will be conducted via a scheme of arrangement from a special purpose vehicle (SPV) controlled by a fund affiliated with TPG.

In line with this, Chiam believes that traditional sectors such as education, infrastructure, and healthcare remain "healthy" and are likely to continue attracting deal activity, as current M&A challenges impact them less than other sectors.

Meanwhile, financial services, including insurance, consulting, and financial advisory, along with engineering services, products and select start-ups, are undervalued and prime for consolidation.

"The past few years have been rough for the venture capital industry, and I expect a recovery for start-ups that have managed to stabilise and get to black," says Chiam.

He notes that there are fewer distressed M&As or opportunistic buys, as finance teams are "looking to refinance ahead of the companies getting into trouble". "Hence, such opportunities will diminish and be restricted to those that are not even able to refinance," Chiam adds.

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Jason Saw, group head of investment banking at CGS International Securities, observes that surplus capital is now widespread across the market. Photo: Albert Chua/The Edge Singapore

In contrast, Saw believes the consumer sector in Southeast Asia is currently undervalued compared to its counterparts in North Asia. Referring to public market multiples of consumer companies in Singapore, Malaysia, Indonesia and Thailand, the market is seeing high single-digit to low double-digit multiples, with mid-teens at best.

"I think it's pretty much undervalued, because the value of Southeast Asian businesses today is distribution. Of course product matters, but distribution is not something you can replicate easily. There's a lot of value in the consumer sector," he says.

Saw also observes a trend towards platforms and bolt-on acquisitions. "Today, [the] public market demands scale. [If] you're sub-scale, people have no interest to list," says Saw, adding that the decline in listings is a "global trend", although the size of the companies that go public are "much bigger".

"If there's any advice we will give [our] clients, [it's to] really bulk up, build bigger privately, first, before you go for IPO. Again, it goes back to the theme that bigger is better in this market. So if you're making $5 million to $10 million in profits, you say, Let's get private fundraising," he notes. "When you build to $50 million, then maybe... you go for IPO."

He also notes that different markets have distinct dynamics. In Malaysia, for instance, the group is focused on smaller deals due to strong demand.

In Singapore, executing smaller deals has been more difficult. "I think that's [been] proven in the last few years, especially Catalist deals. But of course, I think if you have a high-growth, high-margin business coming, [the] market would like it. It's just we don't see that many, at least in the last few years outside of REITs."

Private versus public

The rise of private equity (PE), backed by record levels of dry powder, is driving a wave of privatisations, as investors look to capitalise on lower valuations and delist companies for restructuring away from the scrutiny of public markets.

"Unfortunately, the market doesn't give all these companies the right value," says Saw. "There's a lot of stand-by money, off-site, private capital, [and] unless the market starts to give better valuations, that trend will likely continue."

Based on his calculations, Saw estimates that there is an excess of US$5 billion worth of dry powder in the mid-cap PE space in Southeast Asia that remains uninvested. "These are standby committed money that is not deployed," Saw adds, further illustrating the fact that companies no longer require public funds today.

This trend has only surfaced in the past year or two. "There's a lot of build-up of all this PE money, because in terms of sovereign funds and large endowments, the allocation to alternative and private capital is increasing as a percentage [and] that's a global trend," says Saw.

"So you have a group of general partners (GPs) that have managed to raise money. Southeast Asian funds you raise are somewhere between US$250 million and US$1 billion for each fund. All of this needs to be deployed," he adds. "I think [PE] is a market that is growing. Unfortunately, if you look five years down the road, [PE] will be a bigger asset class segment as a percentage of allocations from endowments and pensions."

According to Deloitte's Southeast Asia edition of its Asia Pacific Private Equity 2025 Almanac, Southeast Asia's share of PE-backed deal value in Asia Pacific has nearly doubled over the past three years, from 3.7% in 2022 to 6.8% in 2024. Last year, there were 69 PE-backed deals totalling US$9.4 billion facilitated in the region, compared to the US$5.2 billion across 87 deals in 2023.

The report also shows that technology, media and telecommunications, which accounted for nearly 52% of the total deal value, were the dominant sectors in Southeast Asia's PE landscape in 2024.

In the next few months, corporate investing and PE investing will still take place, says Saw. "There are an increasing number of platforms, or bolt-ons to bulk up companies for exits. So I think more in that space, less of a distressed market, even now."

"Deal pipeline is growing. We've been very busy. While there's probably a pause in the last one, two weeks or so, we do expect activities to resume," he adds. "So year on year, definitely a growth year for deal making. IPOs, however, will still be a bit more lukewarm, but maybe slightly better than last year, which was a bad market."

Across the region, Saw notes that deal activity will remain high, particularly in the Malaysian market, which is focused on building its pipeline through to 2026.