* Asian M&A falls 39 pct in Q1 from year earlier
* Outbound deals to U.S., Europe slump
* Intra-Asia deals relatively strong
By Sumeet Chatterjee and Jamie Freed
HONG KONG/SYDNEY, March 31 Merger and
acquisitions involving Asian companies fell 39 percent in the
first quarter of 2017 to $176 billion, the lowest level in
nearly three years and highlighting a sharp pull back in
overseas deals by Chinese firms.
While dealmaking was weak across the board with big falls in
outbound deals targeting U.S. and European firms, intra-Asian
M&As were by comparison relatively strong - increasing their
tally of the total to 61 percent from 56 percent a year earlier,
Thomson Reuters data shows. The figures reflect deals involving
Asian companies excluding Japan.
The intra-Asia deals reflected sector consolidation in major
Asian economies and privatisation and asset sales in countries
such as Singapore and Australia.
Most of the bidders were either cash-rich Asian companies or
private funds keen to tap into Asia's increasing consumer
demand, investment bankers said.
"M&A deal activity within the region remains robust," said
Mervyn Chow, Asia co-head of investment banking and capital
markets at Credit Suisse.
"While the capital controls in China may impact cross-border
deals in the short term, we expect to see China investments that
are strategic in nature to continue."
Nine of the top 10 Asia-Pacific deals announced in the first
quarter of this year were intra-regional. The merger of
Vodafone's India unit with rival Idea Cellular
topped the chart.
Bankers said they expected more of the same, pointing to the
potential sale of Singapore-listed Global Logistic Properties
, which has a market value of over $9 billion, and the
privatisation of power companies in Australia.
M&A advisory fee volume dropped nearly 40 percent to $321
million. Morgan Stanley was the top advisor, followed by
Industrial and Commercial Bank of China and Credit
In 2016, announced M&A deals involving Asian companies,
excluding Japan, totalled $1.2 trillion, just below a record
level in 2015.
Tighter regulations in China have made it tougher for
Chinese firms to launch takeovers overseas, which had a major
impact on the region's overall dealmaking in the first quarter.
Deals between Asian companies totalled $107.4 billion in the
first quarter of 2017, down from a year-earlier $163.4 billion.
Asia-Pacific outbound deals targeting U.S. assets fell 78
percent in the first quarter from a year ago, while similar
deals targeting European firms declined 85 percent.
Chinese buyers remain interested in Australia, but
constraints on capital outflows have made it more difficult for
deals to get done, said Deutsche Bank's Australia and New
Zealand co-head of corporate finance Bruce MacDiarmid.
"What we are seeing now is those deals that do get done have
a strong strategic relationship to state-owned enterprises and
what they want to achieve," he said. "Other deals will be harder
for them to do now."
($1=1.3067 Australian dollars)
(Reporting by Sumeet Chatterjee and Jamie Freed: Editing by
Anshuman Daga and Neil Fullick)