“Potential investors look for stability in terms of policy, with the involvement of reputable individuals.”
FRANCESCO CIGALA, Bain & Co partner and Malaysia country head
KUALA LUMPUR: Bain & Co, a global management consultancy firm, remains cautiously optimistic about merger and acquisition (M&A) growth in Malaysia, citing that the appetite has largely been driven by local players.
Bain & Co partner and Malaysia country head Francesco Cigala said while there are lot of things happening globally, local uncertainties must be cleared first before proceeding with M&As in any country.
“Potential investors look for stability in terms of policy, with the involvement of reputable individuals,” he said, during a media discussion, here, yesterday.
However, Cigala said the escalation of a trade war, unclear policies and currency devaluation can hinder M&A activities, which in turn would affect investors’ confidence.
He said M&As can be a key value creation lever for the corporate sector to leverage, including strengthening its position in existing core business, expanding into new markets and preparing for disruptions.
“Strengthen, expand and disrupt are the key values for companies to find their growth opportunities,” he said.
Bain & Co partner Suvir Varma said foreign investors are seeking alternative investments in Asian countries, outside of India and China, particularly in the Asean region, spurred by stable economies and growing infrastructures.
He said Asean offers the same attractiveness that underlines investment characteristics for investors, in particular in M&As.
However, he ruled that investors were not reliant on the public equity market as their sources of funding. Instead, they focus on private sources through local corporate M&As or private capital/debt market for funding source.
Suvir said investors want to generate returns by alternative investments, mainly in highyielding portfolios. He said financial investors are adopting a “wait-and-see” method to carefully see the country’s development in terms of policies and government structural changes.
Based on Bain & Co’s latest research, the Southeast Asia region has had an active year in total deal value across corporate M&As and financial sponsor investments.
It said private equity achieved US$20 billion (RM80.89 billion) in deal value last year from US$8 billion (RM32.36 billion) in 2016, driven by mega deals, strong sub asset classes and positive impact from digital.
Bain & Co advises clients on strategy, operations, technology, organisation, private equity and M&As.