MORGAN Stanley, Merrill Lynch & Co, and J.P. Morgan Chase & Co, which dominated takeover advisory work in Singapore during 2001, saw their business slump more than 95% last year as volume shrank three-quarters.
Morgan Stanley fell to seventh place from first with US$554mil of takeovers, less than a 40th of the US$22.4bil it worked on in 2001, Bloomberg data showed. Merrill’s US$428mil ranked it ninth, down from second with US$20.9bil, while J.P. Morgan tumbled to 15th place with US$86mil, from third with US$18.7bil.
Goldman Sachs Group Inc topped the ranking last year with US$1.5bil of the US$7.7bil of deals – a quarter of the business it had 12 months ago.
After 2001’s record US$34bil of transactions, some investors do not expect a rebound as Singapore struggles to recover.
“You can’t expect too much,” said Franki Chung of TAL CEF Global Asset Management in Hong Kong. “The population is small and the economy isn’t doing well.” After the benchmark stock index fell by a fifth last year, companies are in no hurry to buy or sell assets.
In November, Temasek Holdings delayed the sale of three power plants until at least 2004. “Temasek can afford to be opportunistic at this time and wait for the right time to make any divestments, or even acquisitions,” said Philip Lee at J.P. Morgan. The US bank advised on one takeover in Singapore last year, when HSBC Holding bought Keppel Insurance Pte Ltd.
J.P. Morgan may jump up the rankings in the first quarter of this year, advising Neptune Orient Lines Ltd on its sale of American Eagle Tankers, valued at about US$500mil, and Temasek’s CPG Corp, an architectural and engineering consultancy.
The delay in the power plants' sale, first postponed in September 2001, dealt a blow to adviser Morgan Stanley, which worked on four takeovers but no share sales in 2002.
Investment banks globally are cutting staff as fees shrink, axing about 100,000 jobs in the past two years. Mergers worldwide fell 29% last year to the lowest level since at least 1998.
Revenue from Singapore-related business may have shrunk to about US$35mil from US$153mil based on industry averages for merger and acquisition fees of about 45 basis points. – Bloomberg
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