Asialaw Profiles
The Guide to the legal markets of the Asia-Pacific

Commerce & Finance and DeHeng Law Offices have topped the ranking tables summarising deal activity in Asia for the first half of 2009. This is the first time that Chinese firms have secured the number one and two spots in the value charts.

Surprisingly beating the UK magic circle firms, Commerce and DeHeng advised on US$20.2 billion and US$19.2 billion worth of deals respectively according to Mergermarket.

Key deals for Commerce included acting as counsel to Aluminum Corporation of China (Chinalco) on its US$11.8 million failed attempt to acquire stakes in nine mining assets owned by Rio Tinto. And the firm also advised China Construction Bank (CCB) on the sale of a 5.78% stake to BOCI Asia Limited, China Life Insurance, Hopu Investment Management and Temasek Holdings (announced on May 13).

Meanwhile DeHeng advised China Yangtze Power on its US$15.8 million bid for the hydroelectricity generation assets and stakes in peripheral service companies of China Three Gorges Project Corporation (announced on May 16). And it advised Ping An Insurance on its bid for a 16.76% stake in Shenzhen Development Bank (announced on June 12).

While India and Southeast Asia are showing strong potential for future M&A opportunities, it is the Greater China region that is expected to dominate deal activity for the remainder of the year.

But there are strong hopes for the Asia-Pacific region in general as we move into the second half of the year. For example, the region as a whole is playing an increasingly important role in global M&A dealmaking, contributing 19.5% of the global deal value and 22.7% of the global deal volume for the first half of the year. This is up from just under 18% for the first half of 2008.

And with 462 deals announced in Q2 2009 – 11.6% more than in the previous quarter – the downward trend in Asia-Pacific M&A activity of the past five quarters appears to have come to an end.

The total Asia-Pacific deal value for the quarter of $89.6bn was also up on the previous quarter, by 84.4%. This was in sharp contrast with global deal value which decreased by 24.1%.

Partly explaining the figures – and the fact that the financial services sector accounted for 22.9% of total deal value in Asia-Pacific so far this year – is the need for overseas financial institutions to increase liquidity.

In the past few months, several banking giants in Europe and the US have offloaded their Asian operations or Asian banking stocks.

These include: Bank of America selling a 5.78% stake in CCB for US$7.3 billion after doubling its stake to almost 20% late last year; RBS selling its 4.26% stake in Bank of China (BOC) to Hopu Investment Management for US$2.4 billion; and Goldman Sachs placing a 0.9% stake in BOC on the market in June for US$1.9 billion.

Source: Mergermarket (legal advisers to Asia M&A by value ex. Japan and Australasia)