India’s AZB & Partners and Singapore’s WongPartnership and Allen & Gledhill were among the top legal advisers for mergers and acquisitions in Asia, excluding Japan, in the first quarter of this year, as M&A activity in the region dropped dramatically amid a still-unresolved trade war between the U.S. and China and slower growth in China, which has acted as Asia’s economic engine.
The rankings are based on data compiled both by Refinitiv and Mergermarket.
AZB topped both Refinitiv and Mergermarket’s rankings, which are based on deal values. King & Wood Mallesons took second place in Refinitiv’s rankings, while Allen & Gledhill was ranked second by Mergermarket. WongPartnership placed third in both rankings.
Last month, AZB advised Indian conglomerate Reliance Industries Ltd.’s east-west gas pipeline on a $1.8 billion sale to Toronto-based investment firm Brookfield Asset Management.
WongPartnership and Allen & Gledhill broke into the top five M&A advisers in this year’s first-quarter rankings. In the same period last year, they ranked outside the top 25. WongPartnership is advising Singaporean developer CapitaLand Ltd. on a $4.4 billion acquisition of the logistics and industrial assets from sovereign wealth fund Temasek Holdings Pte. Ltd.’s real estate developer arm, which is represented by Allen & Gledhill.
The $4.4 billion CapitaLand deal was the biggest involving a company in the Asia-Pacific region during the first quarter. Overall M&A activity in Asia-Pacific, excluding Japan, in the first three months of 2019 totalled $199.9 billion from 666 deals, according to Mergermarket. This was the lowest value in five years, since the same period in 2014.
China’s slowing growth since the second half of 2018 is to blame for the drop, according to Mergermarket’s report. In January, China reported its economy grew 6.6% in 2018, the country’s slowest growth rate since 1990. The ongoing trade conflicts between China and the U.S. also contributed to the slowdown in M&A activity, the report notes.
The total value of outbound activity from Asia-Pacific was down 10.3% year on year in the first quarter, and fell to the lowest level since the fourth quarter of 2012 due to tighter regulations in both China and the U.S., according to Mergermarket. Outbound Chinese M&A activity is expected to remain low, with the European Parliament approving legislation in February to screen foreign investments, a move seen as largely aimed at Chinese investors, the report says.
In Japan, Morrison & Foerster and the Japanese firms Mori Hamada & Matsumoto and Nishimura & Asahi were in the top five in both Refinitiv and Mergermarket’s rankings. Morrison & Foerster topped Refinitiv’s while Mori Hamada ranked first in Mergermarket’s.
SoftBank Group Corp.’s $6 billion investment in office-space giant WeWork Cos. Inc. was the biggest deal involving a Japanese company in the first quarter, according to Refinitiv. Morrison & Foerster is representing SoftBank on the deal. The biggest deal involving a Japanese target company, according to Mergermarket, was a domestic deal in which Japanese brewer Kirin Holdings Co. bought the biochemical businesses of its own subsidiary, Kyowa Hakko Kirin Co. Ltd., for $1.2 billion.
Japanese M&A activity also decreased, recording $7.8 billion from 96 deals between January and March 2019, a 14.2% drop from the same period a year earlier. But Japanese companies are still under pressure to pursue growth outside of the country, according to Mergermarket’s report, a strategy that has been encouraged by Japanese Prime Minister Shinzo Abe since 2012.
For the rest of the year, uncertainty remains, but progress in the China-U.S. trade negotiations and the Chinese Government’s easing of restrictions on foreign ownership might help improve M&A prospects in the region, Mergermarket notes.