The industrial market—including both manufacturing / production companies and their suppliers—is experiencing continued consolidation through mergers and acquisitions as companies seek to grow and don’t see an organic alternative. This is true, not only in the US, but also globally according to data and analytics company GlobalData.
The Asia-Pacific (APAC) region’s share in the global mergers & acquisition (M&A) deals jumped to 31.6% in the fourth quarter (Q4) of 2017, a sharp rise from the 5% recorded in the previous quarter. According to GlobalData’s latest report, ‘Smart Money Investing in the Consumer Packaged Goods Industry in Q4 2017’, strong growth in APAC’s emerging economies offers a potential goldmine of opportunities to players in the CPG industry.
M&A deals in the region are primarily driven by the growing demand for healthy and convenient food and drinks amidst rising health consciousness and increasing income levels. Major players in the region are taking M&A route to expand their geographic presence as well as increase product portfolio to broaden their reach in potential new markets. For instance, ThaiBev acquired a 75% stake in Myanmar Distillery Company and Myanmar Supply Chain and Service, in an effort to expand its overseas reach to other Asian countries, while Zhejiang Huatong Meat Products acquired 100% stake in Xianju Guangxin Food to expand its portfolio.
The food sector accounted for 54% of M&A Deals in Q4 2017, followed by the beverages sector, which accounted for 31% during the same period, according GlobalData’s analysis on sector-wise investments.
The VC funding (VCF) activity took a dip in Q4 2017 compared to Q3 2017 in terms of value. North America recorded the highest share of 73%, while APAC recorded 15% of total value of the activity in Q4 2017. Investing in emerging technologies was the major factor driving VCF activity. For example, China-based Greybox Coffee managed to raise US$15mn through Series A Funding, capitalizing on the growing coffee culture in China, a predominantly tea drinking nation; while FYRE, a one-shot energy drink brand, managed to raise US$500,000 in seed funding.
Most of the PE investments registered in Q4 2017 were focused on companies planning to expand their product offerings, especially in the food industry, suggesting the ability of these companies to focus on creating products that meet evolving consumer preferences. For instance, Korea-based Sung Gyung Food secured funding from Standard Chartered Private Equity, allowing the investor to capitalize on the strong demand for seafood snacks in South Korea.