The growing sophistication of Asian M&A

As an Asian bull, I noted that the ongoing financial integration will boost valuations aside from the activities in the regional corporate arena.

FinanceAsia in their latest article "The growing sophistication of Asian M&A" interviewed, Gordon Paterson, Citigroup's head of regional M&A. Here are some important developments from the standpoint of Mr. Paterson...

> “Transactions have been mostly intra-Asia, partly because the competitive landscape has changed. In the past strong domestic companies competing for assets were the exception, now this is the norm.

> “I'd say that today the cost of capital for emerging market companies is very competitive compared to developed market counterparts and this is fuelling transactions. This is across the board and not just related to the fact that the cost of debt has gone down. In many cases, especially across emerging markets, Asian companies view risk profiles of the countries more favourably than their European and North American counterparts

> “Over the years the very limited avenues of financing have given way to local markets with depth and experience to finance deals. The high yield market may not yet be developed to the stage of the US market but it is certainly developing quickly and in the right direction. Liquidity in the market is high hence alternatives and sophistication are increasing. Convertibles, for example, even in sponsor-led deals are playing a bigger role.”

Overabundance of Liquidity, more access to financing, improving corporate profiles and developing capital markets are indeed helping underpin the expansionary M&A activities in Asia.

Go no further, the boom is yet unraveling.