The beauty sector is growing and glowing in Asia

North Asian countries already comprise the world’s largest markets for beauty and personal care products. China, Korea and Japan together represent 35% of the global market, with above average growth. China skyrocketed to become the industry leader in this region, but has witnessed a troubling market hangover in the last 12 months.

Asia Pacific’s luxury beauty segment – especially China – face the challenge of justifying high prices to increasingly sophisticated and discerning consumers, against a backdrop of economic uncertainty and rising quality and quantity of brands at more accessible price points. At the same time, younger women – and men – are spending more each year.

North America makes up 25% of the global market, while Europe makes up 20%. And those regions are increasingly looking to Asia for innovation and growth.

Asian beauty brands have recovered from the pandemic, and are jostling to find new, compelling ways to connect with consumers. Beauty influencers and DTC brands are both driving and adapting to buyer preferences.

In the past, people would buy beauty brands landed in China purely because they were ‘Made in France’ or ‘Made in Switzerland’. Suddenly now, Asian consumers are rediscovering and appreciating their own rich cultural backgrounds and ancient beauty practices.

This swelling national pride has encouraged new Chinese domestic labels to engage in premium-isation, to offer more interesting propositions, drawing on home advantage. Compared to international peers, they have innovated faster and shown themselves to be adaptable and responsive to local consumer trends. International brands are finding it increasingly hard to grow market share, unless they speak to local preferences.

L’Oréal remains the leading global beauty products company, with US$40bn in global sales, double the size of second-place Unilever. Rounding out the top five are Estée Lauder, P&G and the Japanese giant: Shiseido. All of these are fighting to find growth across Asia, although Estée’s big bets on China have mostly misfired.

Once the domain of Western beauty leaders, the cosmetics industry across Asia is now booming, at least outside China, blending Eastern and Western elements. Rising disposable income and evolving lifestyles drive this growth, marking the beauty industry as one of the most radiant and lucrative consumer segments.

BDA’s latest Insight report shows that:

Skincare continues to be a dominant force in Asia
Indian beauty is experiencing rapid growth, projected to reach US$33bn by 2027, with a CAGR of over 6%
Thailand’s beauty industry is growing and bifurcating, with both mass and premium brands performing well
Prominent Asian beauty companies are pursuing ambitious regional expansion across India, Thailand and Vietnam, accelerating expansion into secondary Asia Pacific markets

Younger emerging Western beauty leaders such as Kylie Cosmetics and Fenty Beauty are debuting in India, China and SE Asia to widen their consumer base.

The market is evolving and shifting fast. BDA is carefully monitoring these market dynamics, working on multiple transactions in the space. We’ve closed a number of exciting beauty transactions. We’re seeing strong dealflow. Let us know if we can help you.

GP-led secondaries have become a more attractive, alternative, path to liquidity amid a challenging exit environment for sponsors during the past two years. While APAC markets still lag behind their Western counterparts in terms of utilising this type of transaction, recent completed transactions have been encouraging.

In BDA’s latest insight piece, we share our key thoughts on the Asian GP-Led secondaries landscape:

Continuation Fund transactions, established in the US and Europe, are growing in Asia, with notable activity in Japan, India, China and SE Asia
Market volatility and challenging exits are driving more sponsors to the secondaries market
Secondary investors prioritise GP-alignment, growth and resilience; however macro-economic and political uncertainties, particularly in China, have lead to a pricing gap and a more cautious investment
Secondary funds “dry powder” remains high and investors are focusing on well-performing assets, strong GP-alignment and recession resilience

Download the full report for more insights on the Asian GP-led secondaries

For a decade, China has been the engine for global luxury growth. China now accounts for 25% of global luxury spending, but this year, China’s growth has slowed to a trickle.

India today is a much smaller luxury market, representing 5% of global luxury spend, but it’s suddenly seeing explosive growth.

GDP growth, 8.2% in 2023, lit the touch paper. Next: the fireworks.

India is the fastest-growing major global economy. Political reform and a fast-growing, hyper-aspirational, young middle-class are driving India toward being the third largest consumer market globally.

The luxury and ultra-luxury sectors, across real estate, hospitality, apparel, accessories and automotive, are witnessing phenomenal growth. In BDA’s latest insight piece, we analyse the tremendous growth of luxury in India.

India successfully rebounded from the disruptions of COVID-19 to emerge as the fastest-growing major economy
By 2030, 25% of India’s population will be aged between 20 and 33, positioning India as the largest “young consumer market” globally
The credit landscape has significantly shifted towards “buy now, pay later”, driven by an expanding ecosystem and increased discretionary spending
The Reserve Bank of India is enhancing credit accessibility in underserved sectors such as agriculture, small and medium enterprises and housing
India as a global tech hub has driven widespread adoption of digital payments, online shopping and social media engagement, prompting local companies to integrate new technologies to cater to evolving consumer demands
India’s luxury market is set to more than triple by 2030, driven by a growing consumer base and increasing wealth, particularly from high-net-worth individuals
India’s burgeoning high-end market is attracting global brands and incubating local luxury too

Download the full report for more insights on the luxury sector in India

About BDA Partners

BDA Partners is the global investment banking advisor for Asia. We are a premium provider of Asia-related advice to sophisticated clients globally, with over 25 years’ experience advising on cross-border M&A, capital raising, and financial restructuring. We provide global reach with our teams in New York and London, and true regional depth through our seven Asian offices in Mumbai, Singapore, Ho Chi Minh City, Hong Kong, Shanghai, Seoul and Tokyo. BDA has deep expertise in the Chemicals, Consumer & Retail, Health, Industrials, Services, Sustainability and Technology sectors. We work relentlessly to earn our clients’ trust by delivering insightful advice and outstanding outcomes.

BDA Partners has strategic partnerships with William Blair, a premier global investment banking business, and with DBJ (Development Bank of Japan), a Japanese Government-owned bank with US$150bn of assets.

US securities transactions are performed by BDA Partners’ affiliate, BDA Advisors Inc, a broker-dealer registered with the Securities and Exchange Commission (SEC). BDA Advisors Inc is a member of the Financial Industry Regulatory Authority (FINRA) and SIPC. In the UK, BDA Partners is authorized and regulated by the Financial Conduct Authority (FCA). In Hong Kong, BDA Partners (HK) Ltd is licensed and regulated by the Securities & Futures Commission (SFC) to conduct Type 1 and Type 4 regulated activities to professional investors. www.bdapartners.com

In China’s dynamic healthcare market, M&A activities are booming due to an ageing population and increasing consumer health demands. The sector is seeing heavy domestic investments from Chinese firms and Government funds. PE firms are seizing M&A opportunities amid capital raising challenges. Chinese companies are also eyeing cross-border M&A for tech-driven healthcare targets. The market outlook indicates industry reshuffles, rising demands for elderly care and consumer health, and flexible growth strategies by multinational firms.

Investment trends highlight a focus on resilient segments, surging investment in out-of-pocket payment sectors and Chinese firms expanding globally, particularly across SE Asia and the Middle East. European healthcare companies remain attractive for Chinese investors; licensing deals are on the rise, led by Chinese pharma firms.

In our latest Insights piece, we summarise the predicted outlook of China healthcare M&A for 2024:

Domestic strategics, Government-backed funds and RMB funds are investing heavily in China’s healthcare market
There is an increasing difficulty for companies looking to raise capital in private or public markets, leading to M&A opportunities for large-cap PEs
Support from the Chinese government to grow the private healthcare sector, including the development of private hospitals and elderly and home care services
Narrowing valuation gap between IPO and trade sale facilitates more M&A deal completions

Download the full report for more Insights regarding the Chinese healthcare sector.

About BDA Partners

BDA Partners is the global investment banking advisor for Asia. We are a premium provider of Asia-related advice to sophisticated clients globally, with over 25 years’ experience advising on cross-border M&A, capital raising, and financial restructuring. We provide global reach with our teams in New York and London, and true regional depth through our seven Asian offices in Mumbai, Singapore, Ho Chi Minh City, Hong Kong, Shanghai, Seoul, and Tokyo. BDA has deep expertise in the Chemicals, Consumer & Retail, Health, Industrials, Services, Sustainability and Technology sectors. We work relentlessly to earn our clients’ trust by delivering insightful advice and outstanding outcomes.

Jonathan Aiken, Partner and Head of London, discussed how a challenging economic environment is spurring the uptake of creative deal structures in a recent Ansarada Global Predictions Interview.

Which sectors, if any, do you believe will move to more aggressive growth strategies in their M&A programs, as opposed to more defensive dealmaking?

Within the mid-market, where we operate, investors strive for profitability and cashflow stability. In today’s complex investment environment, having high-revenue growth yet negative cashflow is completely out of vogue. Companies with a robust history of cashflow generation, for example the more resilient actors in the industrial and services sectors, have become good candidates for financing – or at least they don’t raise questions within investment committees or with their lenders. What one might think of as ‘traditional’ sector areas are outperforming as a result. Another example is healthcare, where macro trends such as aging populations and evolving healthcare needs in a post pandemic environment drive investment. The European luxury market has witnessed strong growth over the past few years. In France, some of the listed flagship leaders have seen phenomenal share price growth. While valuations have recently plateaued, the market boom reflects strong spending patterns of ultra-high-net-worth individuals from different regions across the globe – notably China and East Asia. Industries that have stronger cashflow and are more appealing to investors have been particularly resilient to the pressures within the global deal market. This is relevant to the mid-market, where M&A activity/volume has developed fairly well. It is at the higher end of the market where we have seen some multibillion-dollar transactions constrained due to a lack of availability of capital.

What do you think will be the biggest potential risks or challenges that dealmakers will have to contend with in 2024?

If you speak to dealmakers, the broad consensus would be the impact of unforeseen events. The global dealmaking community has lived through significant upheaval and sustained inflation. The challenges we are facing are significant and require nimble responses to seize new opportunities. Most practitioners believe that being able to react quickly to developing situations is a fundamental survival mechanism. On a micro level, it is worth sparing a thought for those managing their business through transactions, as often we hear of the difficulty in budgeting and forecasting while responding to supply chain disruption. Forecasting uncertainty and responding to market changes take up a disproportionate amount of business leaders’ time, and some do not have the necessary experience to build on. Some managers have not recently experienced significant inflation, for example, or needed to deploy price increases in their market – it is a novel experience for them. Even for leaders with 30 or 40 years of experience, the ability to respond and implement changes can be challenging. This dynamic ties into the broader dealmaking flow, as business leaders face the realization that their typical, traditional five-year business plan will not work in a challenging environment. Some businesses even have trouble forecasting growth over the next 12 months. This inherent uncertainty in the market creates a divergence between buyer and seller expectations – just one reason why dealmakers are experiencing difficulty closing transactions.

In your experience, how much more creative are dealmakers having to be, in terms of alternative deal structures, to bridge valuation gaps and get transactions over the line?

The market has come off a period of red-hot dealmaking in which the seller exercised an enormous amount of power, both in terms of the timing and terms of the transaction. During this period, we saw the dissipation, or disappearance in some cases, of dealmaking mechanisms such as earnouts. Now that dealmakers are operating in a much more uncertain environment, the balance of power has shifted, and some of these traditional mechanisms, including earnouts, are coming back to the fore to bridge the gap between buyer and seller expectations. We are also seeing a change in tack in relation to seller strategy. Whereas even in late 2022 financial sponsors would have run a competitive, fast-paced auction process, through 2023 owners of assets quietly and discreetly tested the market. This takes the form of entering into very specific conversations, seeking validation regarding buyer appetite, and even considering a bilateral process. This cautious, selective approach is very different to what we have seen in previous years. This period of relative quiet may present an interesting market environment for international buyers to consider deal opportunities. Many strategic buyers seeking cross-border opportunities have found it hard to compete against local sponsors within a competitive auction process when the market was booming. Now that valuations are more subdued, and the market is less pressured, it is an interesting time for international buyers. We will begin to see this trend play out, and it will be interesting to see how 2024 unfolds.

Amid a sea of economic and geopolitical challenges, are dealmakers dedicating more resources to due diligence to make sure potential deals get off on the right foot?

We are seeing a rise of vendor diligence across many different markets, even in markets that have not necessarily had a high level of experience in the process. In Asia, for example, a vendor will typically carry out financial, tax and other types of due diligence, whereas this was less common five years ago. ESG analysis is a newer area increasingly pursued. In the corporate carve-out space, a major cause of disagreement over value, and in many cases a potential roadblock in the deal, is within IT services, contracts and costing. In response to this challenge, we have seen a rise in thoughtful preparation of the IT diligence materials linked to IT resources for a dedicated asset and a focus on IT compliance. There is definitely more time and care spent on smoothing over potential issues. On the seller side, effective due diligence is part of de-risking a transaction and enhancing the probability of a deal crossing the line. We also see fairly rigorous and significant diligence analysis on the buyer side. Due to the shift in power between buyer and seller, the former can demand more concessions, and perhaps more price adjustments, by highlighting due diligence findings. It is in their interests to pursue the process vigorously.

About BDA Partners

BDA Partners is the global investment banking advisor for Asia. We are a premium provider of Asia-related advice to sophisticated clients globally, with over 25 years’ experience advising on cross-border M&A, capital raising, and financial restructuring. We provide global reach with our teams in New York and London, and true regional depth through our seven Asian offices in Mumbai, Singapore, Ho Chi Minh City, Hong Kong, Shanghai, Seoul, and Tokyo. BDA has deep expertise in the Chemicals, Consumer & Retail, Health, Industrials, Services, Sustainability and Technology sectors. We work relentlessly to earn our clients’ trust by delivering insightful advice and outstanding outcomes.

One of the most promising shifts for decarbonisation is the introduction of “Cooling-as-a-Service” or “CaaS”. With temperatures rising globally, temperature cooling has never been as important but comes with a significant environmental footprint. Outsourcing cooling to a third party directly incentivises these service providers to provide service as efficiently and environmentally friendly as possible and design a better, less carbon-intensive cooling infrastructure.

The carbon footprint of the “built environment” already represents ~26% of global CO2 emissions and will continue to become more significant without fundamental change
The CaaS model allows the service provider to assume full responsibility for the design and investment ownership required for the cooling installation and related equipment, associated energy and water consumption, and it’s operation, maintenance and optimisation
The service provider is accountable for achieving specific metrics while charging at a fixed price
The client is only responsible for ensuring a consistent supply of electricity and water to the equipment
The CaaS provider is therefore directly incentivised to install and/or run the equipment in the most efficient way possible

Download the full report for more insight regarding CaaS and its potential impact on decarbonisation

Sources: United Nations, Global Change Data Lab, IEA, The Economist

About BDA Partners

BDA Partners is the global investment banking advisor for Asia. We are a premium provider of Asia-related advice to sophisticated clients globally, with over 25 years’ experience advising on cross-border M&A, capital raising, and financial restructuring. We provide global reach with our teams in New York and London, and true regional depth through our seven Asian offices in Mumbai, Singapore, Ho Chi Minh City, Hong Kong, Shanghai, Seoul, and Tokyo. BDA has deep expertise in the Chemicals, Consumer & Retail, Health, Industrials, Services, Sustainability and Technology sectors. We work relentlessly to earn our clients’ trust by delivering insightful advice and outstanding outcomes.

Huong Trinh, Partner and Head of Ho Chi Minh City at BDA Partners, shares her insights with Vietnam Investment Review.

With only three months of the year left, how has Vietnam’s M&A for 2023 fared so far?

Over the second and third quarters of 2023, a number of M&A transactions with deal size of over $100 million were announced. Some notable deals are the investment of up to $500 million into Masan Group Corporation led by Bain Capital, the $381 million acquisition of FV Hospital by Thomson Medical Group, and the investment into Xuyen A Hospital by Warburg Pincus. In addition, there are ongoing sizable M&A transactions across the consumer, healthcare and education sectors, which have received strong interest from both strategic and financial investors and are likely to reach the signing stage in the next six months. Even though the total deal volume in 2023 might be impacted, the average transaction value based on recent transactions has increased significantly. The healthy deal flow emphasizes investors’ confidence in the market’s long-term growth potential.

As local businesses are struggling amid a challenging economic outlook, do you see foreign investors stepping up their M&A transactions here?

Despite various macroeconomic challenges, Vietnam is expected to achieve a GDP growth rate of 5-6 per cent in 2023. The macroeconomic environment and consumer demand are expected to start to recover in the first half of 2024. Foreign investors, despite the market’s weakening performance in 2023, continue to source and monitor the investment opportunities in Vietnam. There has been a long-term view that Vietnam is one of the most attractive markets for investment in Southeast Asia thanks to its favourable demographics, resilience, as well as government efforts in improving the investment environment.

Inbound M&As remain vibrant in banking, healthcare, renewables and real estate. Why do these sectors remain a target?

Vietnam’s favourable demographics, stable socioeconomic environment, increasing disposable income, and improving investment environment remain key factors that underpin the inbound investments into the banking sector, such as the $1.5 billion acquisition of a 15 per cent stake in VPBank by Sumitomo Mitsui Banking Corporation, and the $850 million acquisition of 15 per cent stake in BIDV by KEB Hana Bank. Notable deals in the healthcare sector are the acquisition of FV Hospital by Thomson Medical Group, the investment into Xuyen A Hospital by Warburg Pincus, AIH by Raffles Medical Group as well as Singapore’s sovereign wealth fund GIC’s investment into Nhi Dong 315, a Vietnamese pediatric clinic operator. In the renewable energy sector, Vietnam witnessed the $165 million acquisition of a 49 per cent stake in Vietnam solar platform Solar NT from Super Energy Corporation by AC Energy Corporation, and the $108 million acquisition of a 35 per cent stake in Gia Lai Electricity by JERA. Regarding real estate sector, there is the $250 million investment into Novaland led by Warburg Pincus, along with the $650 million investment into Vinhomes by KKR. We expect that M&A activities in these sectors will continue to increase in the future.

Do you expect any shift in investor interest in emerging fields in Vietnam, such as electronics, semiconductors, and electric vehicles?

Yes, we have seen increasing interest in these areas as a result of Vietnam’s unique positioning – strategic location, skilled workforce, cost advantages, and stable socioeconomic environment. Following the supply chain diversification which started during the pandemic, and increasing global demand for these products, Vietnam continues to invest in infrastructure and technology to become a major industrial hub in Asia. The government has taken a proactive approach in developing these new sectors. In August 2023, the Ministry of Transport submitted its proposal on special incentives for electric vehicle (EV) producers and users to a deputy prime minister. These incentives included preferential special consumption tax, exemption of licence plate issuance fees, preferential import tariffs on equipment, production lines and components for the production and assembly of EVs and batteries, and a $1,000 incentive for each EV purchases. As for semiconductors, while it is not a new area as foreign players, Samsung, Amkor Technology, and Hana Micron have already established presence in Vietnam. Such moves have been in the spotlight recently, being a key topic of discussion at the Vietnam – US Summit in September 2023. The Vietnam – US comprehensive strategic partnership and the government support will help Vietnam’s semiconductor industry to develop further.

About BDA Partners

BDA Partners is the global investment banking advisor for Asia. We are a premium provider of Asia-related advice to sophisticated clients globally, with over 25 years’ experience advising on cross-border M&A, capital raising, and financial restructuring. We provide global reach with our teams in New York and London, and true regional depth through our seven Asian offices in Mumbai, Singapore, Ho Chi Minh City, Hong Kong, Shanghai, Seoul, and Tokyo. BDA has deep expertise in the Chemicals, Consumer & Retail, Health, Industrials, Services, Sustainability and Technology sectors. We work relentlessly to earn our clients’ trust by delivering insightful advice and outstanding outcomes.

BDA Partners Managing Partner Paul DiGiacomo was invited to be the keynote speaker at the VinaCapital Vietnam Investor Conference in Ho Chi Minh City in early October 2023. Having lived in Asia for 25 years and been active in Vietnam for the past 15 years, Paul has a unique perspective on the drivers and fundamentals of Vietnam’s investment landscape.

5 takeaways from the keynote speech

1. BDA is bullish on Vietnam

- - - 15+ years active in the market
    - Team of 10 M&A bankers
    - Investing opportunistically into early-stage opportunities through our partners’ fund

2. Vietnam has attractive investment fundamentals, supported by:

- - - A young and dynamic population
    - An entrepreneurial and East Asian culture
    - A stable socioeconomic and political structure
    - Solidly moving up the manufacturing value chain to higher value added areas

3. External macroeconomic conditions that support Vietnam’s growth include:

- - - Strong FDI trends
    - US/China decoupling and global supply chain reorganizations
    - Increasingly strong US support for economic success

4. Risks to Vietnam’s growth are:

- - - Climate change and in particular rising sea levels
    - The potential for deglobalization to proceed more aggressively
    - Infrastructure insufficiency

5. The future is bright in Vietnam. By 2030 Vietnam will have:

- - - 36 million people in the middle class….
    - …distributed across the country, with 25+ cites each having a middle-class population in excess of 250,000
    - Much greater global supply chain integration in high valued-added products such as electronics and semiconductors

BDA Partners has been active in Vietnam for over 15 years. We received our first investment banking mandate in 2007 and established an office in Ho Chi Minh in 2011. We now have a team of 10 bankers on the ground working across multiple sectors.

BDA Partners has significant experience across the water M&A spectrum and is actively engaged on multiple on-going mandates in the sector. We take this opportunity to provide you with a deep dive into the water landscape, including:

Contextualization of why there is a boom in global demand for water and wastewater treatment solutions, signifying why water pressures will result in new investment and M&A activity
An overview of distinct investible water technology propositions that solve some of the water challenges across respective geographical locations
Recent water M&A activity, as well as our views on the valuation landscape
An exclusive Q&A with BlueTech Research, the global leading water commercial due diligence provider, for additional proprietary market insights

Please reach out to our dedicated Sustainability team to discuss further.

Download the full report

Sources: (1) NASA; (2) The Guardian; (3) United Nations; (4) Borgen Magazine; (5) The Guardian; (6) EWG; (7) Financial Times; (8) US Water Alliance; (9) The Guardian; (10) Carbon Brief; (11) US Water Alliance; (12) Desalination Latin America; (13) Water.org; (14) Umweltbundesamt; (15) European Commission; (16) Global Citizen; (17) The National News; (18) Asian Development Bank ; (19) United Nations; (20) China Dialogue; (21) Japan International Cooperation Agency; Financial valuation metrics and M&A activity from CapitalIQ, Mergermarket and BDA transactions

About BDA Partners

BDA Partners is the global investment banking advisor for Asia. We are a premium provider of Asia-related advice to sophisticated clients globally, with over 25 years’ experience advising on cross-border M&A, capital raising, and financial restructuring. We provide global reach with our teams in New York and London, and true regional depth through our seven Asian offices in Mumbai, Singapore, Ho Chi Minh City, Hong Kong, Shanghai, Seoul, and Tokyo. BDA has deep expertise in the Chemicals, Consumer & Retail, Health, Industrials, Services and Technology sectors. We work relentlessly to earn our clients’ trust by delivering insightful advice and outstanding outcomes.

In recent years, many companies have re-evaluated the potential of their businesses and are now considering divesting their non-core assets. This enables the firms to focus on assets providing long-term value, whilst at the same time, presenting M&A opportunities for well-funded companies.

Key considerations and drivers

The post COVID world has seen greater strains on supply chain security, inflation in wages, labour scarcity and heightened commodity volatility. Geopolitical tensions, increasing trade friction, and renewed interest in industrial strategy are all accelerating non-core divestment considerations.

Today, boardrooms are consumed with the topic of supply chain de-risking, in particular with reference to China. De-risking- as opposed to economic decoupling- is a nuanced view that sees global trade and investment as deep-rooted. Solutions include diversification and avoidance of excessive concentration by country and industry. Connected to this trend of de-risking is nearshoring. A Buck Consultants survey, published in February 2022, found more than 60% of European companies are looking to on-shore or re-shore Asian production in the next three years, with the main winners being Central and Eastern Europe, including Turkey.

These megatrends of de-risking and nearshoring are combining to spur further divestments. Below we explore additional factors that are prompting non-core disposals:

Governance of international assets has become increasingly fraught

Regulatory changes and local compliance: trends continue to favour local management and a deep local presence. The ability of foreign owners to respond to international changes is becoming ever more costly and challenging
Prioritization of domestic factors: Foreign brands and companies are at a strategic disadvantage (e.g. consumer preferences, trade policies)
Opportunity cost relative to home market: In a fragmenting world with increasing cross-border barriers, home market advantage can lead to increased profitability and/or simpler forms of control and management structure
Risk appetite: Increasingly, asset owners must decide on multi-year, global strategies. A decline in risk appetite is leading to a flight to safety
Variation by sector: Industrial strategy has focused on politically sensitive sectors that affect employment or security; however some sectors such as healthcare and outsourced technology services have been less impacted.

M&A considerations:

Slowing global GDP growth will accelerate divestments: Weaker growth and fragmented regional assets will accelerate non-core, international divestments
De-risking and divestments flow in both directions: Asset owners in both Asia and the West are actively reviewing and pursuing non-core divestments in respective foreign markets
Challenges in interfacing with local management: Differences abound in governance styles which are often exacerbated by the de-prioritisation of local operations
Local assets are often at risk of underperformance: Lack of oversight and investment can lead to relative underperformance and therefore valuation expectation mismatches upon sale
Lack of buyer knowledge and relationships: Lack of local knowledge restricts and impedes optimal divestment to a local buyer
Sale process requires a bridge between local management and foreign owner: Few M&A practitioners have the reach and expertise to help navigate international non-core divestments successfully.

BDA’s view

With changing market conditions, corporates are re-evaluating their operations with a view to exiting certain business lines to focus on long-term core business areas. We anticipate an important increase in ownership rationalisation driven by risk mitigation, regional compliance and a focus on domestic comparative advantage.

BDA is well placed to support our clients as they confront these opportunities and challenges by virtue of our global presence and significant experience in corporate carveout and cross-border divestments.

Recent selected BDA examples of cross-border divestments between Asia and the West:

December-2022: Sale of Korean-owned but U.K.-based Doosan Enpure to SKion Water
December-2022: Sale of Italian-owned but Indian-based business of the Lavazza Group to Culinary Brands
August-2022: Sale of Chinese-owned but U.S.-based Clearon to Solenis
May-2022: Sale of Korean-owned but U.K.-based Doosan Babcock to Altrad
May-2022: Sale of U.S.-owned but Japan-based PEARL iZUMI to United Sports Brands and Bregal Partners
February-2022: Sale of Japanese-owned but Italy-based Toshiba Transmission & Distribution Europe to Mutares

About BDA Partners

BDA Partners is the global investment banking advisor for Asia. We are a premium provider of Asia-related advice to sophisticated clients globally, with over 25 years’ experience advising on cross-border M&A, capital raising, and financial restructuring. We provide global reach with our teams in New York and London, and true regional depth through our seven Asian offices in Mumbai, Singapore, Ho Chi Minh City, Hong Kong, Shanghai, Seoul, and Tokyo. BDA has deep expertise in the Chemicals, Consumer & Retail, Health, Industrials, Services and Technology sectors. We work relentlessly to earn our clients’ trust by delivering insightful advice and outstanding outcomes.