Asia Report: Year in Review

4 minute read + PDF  05.04.2023 Brendan Clark, Benjamin Smith

The 2023 Asia M&A report highlights the strong focus on investment in Australia, China, Japan, Korea, Malaysia and Singapore, driven by emerging themes such as energy transition and strengthened bilateral relationships.

 

2022 has been a strong year for M&A in Australia albeit off the peak level we saw in 2021. While investors and corporates from North America were more active in Australia during the height of the pandemic, the broader ESG thematics driving investors and the ambition from our neighbours in the Asia Pacific sets the scene for a buoyant 2023 for investment into Australia despite recent high inflation.

Additionally, relationships with Japan, Korea, the South Pacific, and India are strengthening. North Asian investors are particularly interested in energy transition, with hydrogen and critical minerals projects being targeted. Defence expenditure is also increasing, with Hanwha Defense's participation in national defence procurements as an example of changing trends in military equipment sourcing. 

In this report we explore deal highlights, key trends and areas of investment growth and opportunities across various industries in Asia.

Key trends and areas of investment growth and opportunities

 

Energy and Resources Navigation Show below Hide below

China

Australia’s position as a major exporter of in-demand resources and potential player in the value-chain of renewable energy seems assured at least in the short to medium-term. The same applies to premium consumer goods.
Continued evolution of areas of cooperation in less sensitive areas of mutual interest are likely to receive significant investment from the Chinese side.

Japan

Securing Japan’s energy future will remain a significant focus for outbound investment. We expect to see an acceleration of investment in traditional renewables (e.g. solar and wind) as well as hydrogen and ammonia.

Korea

In January 2023, President Yoon emphasised that renewable and green energy sources, such as nuclear power and green hydrogen, will bolster energy security as well as achieve carbon neutrality goals at the World Economic Forum summit in Davos.

Korea is looking to Australia as not only a source of hydrogen and critical minerals required for batteries, but also for new products such as clean ammonia and green steel. Australia is looking to Korea as a leader in technology and as a source of capital to help launch new energy ventures.

Korean businesses are looking to establish supply chains for green hydrogen and critical minerals as Korea works to reduce its traditional reliance on hydrocarbon generation.

Singapore

ESG considerations will continue to drive M&A activity as businesses transition towards sustainable energy solutions in Singapore. Hydrogen technologies and carbon capture and storage, both areas in which Australia has growing capabilities, will be areas of interest for Singaporean investors.

Infrastructure and real estate Navigation Show below Hide below

Japan

The trend for investment in Australia in the real estate sector, both commercial and residential, will continue to be driven by stable yields from commercial properties, the general robustness of the Australian economy and continued population growth in Australia.

Korea

In July 2022, President Yoon's newly unveiled five-year economic plan focused (amongst other agendas) on achieving carbon neutrality by 2050, encouraging investment in electric vehicles (EVs) and charging infrastructure.

Singapore

We saw continued investment in the Australian real-estate sector (including commercial developments and student accommodation) from Singaporean private investors, as well as its sovereign wealth fund, GIC. Singaporean investors also demonstrated interest in businesses offering technology and cyber solutions, including AI, fintech, data protection and blockchain.

Malaysia

The Malaysian construction industry is anticipated to grow 6.2% annually between 2023 and 2026, supported by large scale transport and energy projects and favorable Government policy.

Education Navigation Show below Hide below

China

In China, easy wins may be in the tourism and educations sectors which are positioned for growth following the return of Chinese students to Australia in coming months.

Singapore

Cyber security is expected to be a focus in 2023, as is education. Australian universities are a popular destination for Singaporean students, and any Australian industry or business which provides investors with exposure to that market will continue to be of interest to Singaporean investors.

Read about the trends and opportunities in China, Japan, Korea, Singapore and Malaysia.

Looking ahead

As measures to limit the spread of COVID-19 are phased out and the international economy re-adjusts, there are an array of opportunities for international investment in Australia in 2023.

Australia has lived up to its moniker as “the Lucky Country” as there seems to be a consensus of support for developing business relationships with Australia from all of our Asian neighbours even amid a number of change in Governments in the region over the course of 2022.

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