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December 26, 2022 | 12:00am
MANILA, Philippines — More mergers and acquisitions may take place next year as companies capitalize on opportunities brought by regulations supporting M&A activities to expand and grow their businesses, according to an assurance, tax and advisory services firm.
In its M&A yearend report, PwC Philippines noted that as the country’s regulations continue to adapt to further support M&A activities, public and private companies are capitalizing on this opportunity to expand and grow their businesses.
“Although the pandemic negatively impacted several companies, it also provided opportunities to build their capacity, restructure, and expand and grow their businesses. Private companies were forced to be open to investors to survive and finance their operations,” the report said.
Similarly, it noted that public companies either sold some of their assets or equity stakes to raise funds for their operations.
Moving to 2023, PwC said that dealmaking in the country would continue to be driven by both public and private companies.
“As the Philippine economy continues to open, post-pandemic acquisition opportunities are anticipated to take place for private companies,” the report said.
It said that public company takeovers would continue to be mostly negotiated and contractual for some acquisition of stakes in listed companies.
The report also highlighted that changing the regulatory landscape may also present opportunities for companies and the country.
“As some amendments promote foreign investments in the country, these also allow full foreign ownership of certain companies in selected industries. Laws that will further drive foreign investments in the country include the Retail Trade Liberalization Law, Foreign Investment Act, and Public Service Act,” PwC said.
Meanwhile, PwC pointed out that the Philippines remained one of the more robust countries for dealmakers this year, citing that the country ranked 83rd in the 2022 Global Opportunity Index, which measures the country’s investment landscape.
“Investors seem to be drawn to the Philippines’ resilient service-centered economy and strong domestic demand,” PwC said.
Citing data from Mergermarket, PwC said the Philippines’ year-to-date M&A deals totaled 33 deals in 2022, higher than the 27 deals registered in the previous year.
“As the interest of Asian dealmakers towards other Asian countries increased in 2022, most inbound M&A deals in the Philippines came from China, Japan and other Southeast Asian countries,” PwC said.
According to PwC, the reduction of mobility restrictions helped increase investor confidence as work and recreation activities gradually returned to pre-pandemic levels.
PwC said the technology and telecommunications sectors were among the top sectors in the Philippine M&A space, driven by the recent reforms related to the open towers regulation and the accelerated digital transformation during the pandemic.
It said that significant M&A deals were also seen in the financial sector this year.
“While most industries struggled due to supply chain disruptions, financial institutions were mostly immune as their business operations are less dependent on affected commodities, such as oil and minerals. Investor confidence in the sector has grown within the year as the government initiated reforms to help improve the regulatory framework of the banking, insurance and trust industries,” PwC said.
Moreover, other notable sectors for M&As in the country that are seeing sustained growth in M&A activities include power & energy, transportation, real estate development, and industrial manufacturing.
“The high number of activities in these sectors was driven by the shift from coal to renewable energy as well as the impact of rising oil prices and other related raw materials,” it said.
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