Malaysia's financial services sector saw 31 M&A worth US$1.63bil in 2021

KUALA LUMPUR: Mergers and acquisition (M&A) activities in Malaysia rebounded in 2021 after a minor slump in the preceding year, with a total of 31 disclosed transactions worth US$1.63 billion recorded, said KPMG Malaysia.

It said that since the pandemic, Malaysia’s business landscape has undergone significant changes as businesses sought to re-examine and optimise their corporate portfolios in the pursuit of growth and recovery.

Head of advisory, Chan Siew Mei said M&A activities increased across all sectors in 2021 due to delayed closings and stronger investor confidence.

"We anticipate this momentum to continue through 2022 even as Malaysia transitions towards the endemic phase beginning April 1,’’ she said in a statement today.

Recent high-value transactions include the US$367 million (US$1=RM4.21) deal in the asset management subsector, where Affin Bank Bhd agreed to transfer its controlling stake in Affin Hwang Asset Management Bhd to Luxembourg-based private equity fund, CVC Capital Partners.

"This continued interest could bode well for unit trust funds and Islamic funds, both of which have seen significant growth in the market,’’ she said.

Chan said the insurance subsector has also seen significant growth, recording significant deals worth US$856 million in 2021 following acquisitions of local insurance companies by Italy’s Assicurazioni Generali and America’s Liberty Mutual Insurance Company.

"This sector might see more consolidation, particularly in the acquisition of Malaysian insurers by foreign multinationals, as global insurers continue to seek expansion of their operations through cross border M&A,’’ she added.

Malaysia’s financial technology (fintech) and digital banking sectors also saw an uptick in M&A activity, fueled by the high rate of digital adoption and increased usage of e-wallets, said KPMG Malaysia.

It cited AirAsia Digital’s fintech unit, BigPay, which had raised US$100 million in financing from the South Korean conglomerate, SK Group, as well as merchant commerce platform Pine Labs’s acquisition of Fave, an e-commerce and loyalty platform for US$45 million.

Meanwhile, KPMG Malaysia also noted that Bank Negara Malaysia is set to issue up to five digital banking licenses by the end of this month.

It said the 29 applicants for the digital banking licence included several digital banking consortiums, comprising banks and non-bank companies.

The central bank is also currently laying the groundwork for the issuance of digital insurer licenses, which would allow insurance companies to offer products and services purely through digital channels without having physical or offline contact points.

"We have already seen some notable M&A deals to date within the FS sector, and we can expect discerning businesses to seize further M&A opportunities within this sector.

"Investors are more confident now in planning for the long-term, and we anticipate more exciting prospects will arise in the years to come,’’ said Chan. - Bernama