2023 Mergers and Acquisitions Trends in Asia

Despite the challenges posed by the COVID-19 pandemic, geopolitical tensions, regulatory scrutiny and economic uncertainty, many companies in Asia are looking to pursue strategic M&A and portfolio optimization to achieve growth, transformation and resilience.

Mergers and acquisitions (M&A) activity in Asia is expected to rebound in 2023, after a challenging year in 2022 due to the COVID-19 pandemic, geopolitical tensions, regulatory uncertainties and inflationary pressures. According to PwC’s 2023 Global M&A Industry Trends Outlook, Asia-Pacific (APAC) was the only region that saw a decline in both deal volumes and values in 2022, compared to 2021 and 2020 levels. However, the outlook for 2023 is more optimistic, as CEOs in APAC are more confident about their own revenue growth prospects than their global peers, and are not planning to delay deals to mitigate potential economic challenges and volatility.

Thailand’s merger and acquisition (M&A) volume and value will improve in the second half of 2023, says PwC Thailand’s partner, after many businesses had paused M&A activities due to economic conditions, inflation and geopolitical risks.  

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Although many deals were delayed since the fourth quarter of 2022, there are positive signs in line with global trends. According to the surveyed CEOs, 60% are proactive in continuing their M&A activities this year, despite environmental factors adding pressure on business operations.

Here are some of the key trends and drivers that will shape the M&A landscape in Asia in 2023.

Technology, Media and Telecommunications (TMT)

The demand for digital assets and capabilities is high across industries, as companies seek to enhance their customer experience, operational efficiency, innovation and competitiveness. The TMT sector is also undergoing rapid consolidation and convergence, as players look to expand their offerings and reach new markets. Some of the sub-sectors that will likely see strong M&A activity in 2023 include:

• Cloud computing: Cloud services are essential for enabling remote work, online education, e-commerce and other digital activities that have become more prevalent during the pandemic. Cloud providers are also investing in new technologies such as artificial intelligence (AI), edge computing and quantum computing to offer more value-added services to their customers. Cloud M&A deals will likely focus on acquiring niche capabilities, geographic expansion and vertical integration.
• E-commerce: E-commerce has been one of the biggest beneficiaries of the pandemic, as consumers shifted their spending online. E-commerce platforms are also diversifying their businesses into areas such as social commerce, live streaming, fintech, logistics and health care. E-commerce M&A deals will likely aim to capture new customer segments, increase market share, enhance product offerings and improve operational efficiency.
• Fintech: Fintech is disrupting the traditional financial services industry with innovative solutions such as digital payments, lending, wealth management, insurance and blockchain. Fintech M&A deals will likely involve strategic partnerships, cross-border expansion, regulatory compliance and technology integration.

Energy Transition

The energy transition is another key driver for M&A deals in Asia in 2023. As the world moves towards a low-carbon future, companies in the energy sector are facing increasing pressure from regulators, investors and consumers to reduce their greenhouse gas emissions and adopt cleaner sources of energy. Some of the sub-sectors that will likely see significant M&A activity in 2023 include:

• Renewable energy: Renewable energy sources such as solar, wind, hydro and biomass are gaining traction in Asia, as they offer lower costs, higher efficiency and environmental benefits. Renewable energy M&A deals will likely focus on acquiring projects, assets, technologies and expertise to increase capacity, diversify portfolios and enter new markets.
• Electric vehicles (EVs): EVs are expected to play a major role in decarbonizing the transportation sector, as they offer lower emissions, better performance and lower maintenance costs than conventional vehicles. EV M&A deals will likely involve acquiring battery manufacturers, charging infrastructure providers, software developers and other related players to enhance capabilities, scale up production and expand distribution networks.
• Hydrogen: Hydrogen is emerging as a promising alternative fuel for various applications such as power generation, transportation and industrial processes. Hydrogen M&A deals will likely involve acquiring hydrogen production facilities, distribution networks, storage solutions and end-use technologies to create integrated hydrogen value chains.