RPT-Asia M&A on pace for 8.7 pct uptick, led by bank deals
(Repeats story sent late on Wednesday with no changes to text)
HONG KONG, June 25 (Reuters) - Mergers and acquisitions across Asia are headed for an 8.7 percent rise to $362 billion in volume in the first half, after accelerating in the second quarter, according to preliminary data from Thomson Reuters, led in part by Chinese buyers and financial services takeovers.
The uptick, which is expected to continue, comes amid a drop in deals across the United States and Europe.
Asian private equity activity fell 27.3 percent to $18.8 billion, with buyout shops unable to raise enough money to compete with the region's hungry corporate buyers.
In the second quarter, overall acquisitions in Asia including deals in Japan, rose 16 percent, according to Thomson Reuters.
"There is a dynamic going on here that isn't going on in the rest of the world," said Steven Wallace, Citigroup's (C.N) Asia Pacific M&A head. "We are in the only sizable region that is growing year on year. And the big driver is China."
The top five financial advisers in Asia in the first half were UBS AG (UBSN.VX), Goldman Sachs (GS.N), Morgan Stanley (MS.N), Citigroup and Lehman Brothers LEH.N, according to Thomson Reuters data.
Loaded with cash from a booming economy, China's government and corporate chiefs are seeking to expand by scooping up companies both within Asia and elsewhere.
"The (Asian) M&A market has clearly reached critical mass. It's now both deeper and broader, with healthy deal activity across sectors and throughout the region," said Johan Leven, Goldman Sachs' head of M&A for Asia ex-Japan.
Chinese announced cross-border M&A activity has tripled this year to $48.6 billion worth of deals. Inbound transactions this quarter included Banpu (BANP.BK), Thailand's biggest coal miner, agreeing to spend $420 million to take total control of Chinese coal miner Asian American Coal Inc.
Also this month, mobile operator China Unicom (0762.HK) agreed to pay $24 billion to take over fixed-line peer China Netcom amid a government overhaul of the country's telecoms.
Citigroup advised Netcom, JPMorgan (JPM.N), CICC and Lehman Brothers advised Unicom on the deal.
For a factbox on Asian M&A, click [ID:nHKG296497]
FINANCIALS IN FOCUS
Despite a flurry of natural resources deals in Australia, the top industry target for Asia has been financials. China Merchants Bank (600036.SS) agreed this month to buy Hong Kong lender Wing Lung Bank 0096.HK for $4.7 billion, in a deal advised by Credit Suisse (CSGN.VX) and UBS.
"What's driving financial services deals is more market positioning than synergies, with institutions looking at possible entry strategies into markets like Hong Kong," said Robert Rankin, UBS head of investment banking in Asia. "Opportunities for banks to enter consumer banking in Asia are limited."
And the opportunities are lucrative too, as the region's economic boom has fuelled personal wealth.
China's mining and energy giants have received much of the attention as they pursue deals to help feed the country's appetite for building materials and oil.
And it's not just the giants looking to grow overseas.
Mid-sized Chinese construction machinery maker Changsha Zoomlion won a joint bid on Wednesday with Goldman and two other investors to buy Italy's Compagnia Italiana Forme Acciaio SpA (Cifa) for 271 million euros ($422 million).
"Foreign acquisitions are now being pursued for normal commercial and strategic purposes also by mid-sized Asian corporates, instead of being limited mainly to the largest corporations," Goldman's Leven said.
India, like China, is expanding its corporate reach abroad and is expected to be a driver of overseas deals for the rest of the year.
While Indian M&A volume fell 34.5 percent to $29.4 billion in the first half, the data does not include talks in the last few months by two Indian groups, Bharti Airtel (BRTI.BO) and Reliance Communications (RLCM.BO), to buy South African telecoms company MTN (MTNJ.J), which is worth around $28.5 billion.
Australian companies have been the most favoured M&A target this year with 913 deals worth $70.3 billion, according to Thomson Reuters.
That has been driven largely by the country's natural resources that companies are eyeing amid a China-fueled spike in commodity prices.
"M&A volume has held up well and we expect that to continue for the remainder of the year," UBS' Rankin said. (Reporting by Michael Flaherty, Editing by Tony Munroe and David Cowell)
