By Krista A. M. Montealegre
National Correspondent

THE strong wave of mergers and acquisitions (M&A) will continue this year, as companies remain on the hunt for deals to satisfy their insatiable appetite for growth.

Citing data from Mergermarket, Mary Jade Roxas-Divinagracia, managing partner for deals and corporate finance at PwC Philippines, said 48 deals worth $11.5 billion were closed as of Dec. 25 last year, more than the 44 deals worth $8.4 billion in 2016 when political uncertainty due to the national elections in May that year dented appetite for M&As.

The value of the deals is based only on transactions that have been reported.

Ms. Divinagracia attributed the increase in deal-making activity to business confidence, strong economic growth, low interest rates and high liquidity.

This year’s M&A pipeline will focus on energy and infrastructure, financial services and consumer goods — the same sectors that dominated transaction volumes last year — with the addition of leisure and hospitality as well as logistics given the growth in trade and e-commerce, she said.

“We expect the sectors of renewable energy and infrastructure to be most active,” RCBC Capital Corp. President Jose Luis F. Gomez said in a mobile phone message.

The deal-making environment will remain “strong” this year given high optimism, consumption growth and increased public infrastructure spending, Ms. Divinagracia said, with PwC itself working on “a number” of deals that are expected to be completed this year.

“We hope to see more inbound deals as well given the cheaper currency. However, valuations will still be the show stoppers as some business owners have high expectations,” she said.

BDO Capital and Investment Corp Eduardo V. Francisco concurred, saying in a mobile phone message that “there will be a few sellers unless the price is really high or a multiple of a listed peer.”

The Philippine Competition Commission (PCC) will also make it “challenging” to do deals, Mr. Francisco said. The PCC has been tagged as one of the causes of delays for closing M&A transactions. Several deals submitted last year, including SM Investments Corp.’s purchase of Goldilocks Bakeshop, await approval of the competition watchdog.

“We’ll also see some more outbound investments as local companies remain very liquid and are regularly looking for business opportunities elsewhere,” PwC’s Ms. Divinagracia said.

Local companies will be scouting for opportunities overseas in the areas of food service, new technology and utilities. Last year, they were engaged in eight outbound deals in various countries including the United States, Germany, Indonesia, and Spain.

“As has been the case for many years, there are more interested buyers than interested sellers… However, I think we’ll see more collaborations, strategic partnerships and joint ventures than divestments,” Ms. Divinagracia said.

RELATED ARTICLESMORE FROM AUTHOR