SINGAPORE - Spending US$16 billion in the first four months this year, companies in Singapore ranked second in Asia - excluding Japan and Australia - when it came to the value of acquisitions they made.

Acquisition activity was spread across 145 deals, with the largest involving the Government of Singapore Investment Corporation's (GIC) purchase of a US$6.9 billion stake in Citigroup in January, according to data from Thomson Reuters.

Most acquisitions were domestic - 53 deals or 37 per cent involved Singapore-based companies purchasing other local assets or interests. Acquisitions in China took up the next largest share at 24 per cent, and those in Malaysia made up another 7 per cent.

Acquisitions made by firms in Singapore were 7.6 per cent lower in value compared with the same period last year. Nevertheless, the fall pales in comparison with the 20.8 per cent plunge in acquisition value across the globe.

A number of factors may be supporting the acquisition drive. Said Jeff Pirie, head of corporate finance for Deloitte Singapore and South-east Asia, 'A combination of excess capital, weakness in global equity capital markets and a strong Singapore dollar makes this a good time for Singapore companies to buy quality assets overseas.'

According to another head of corporate finance, the government has also been encouraging companies in Singapore to extend their reach overseas. Companies are perhaps looking to 'develop additional revenue sources because the market here is limited', he said.

Among the top 10 acquisitions by Singapore-based companies this year, half involved property sector players. Mapletree Investments, for instance, will be taking on US$1.3 billion of industrial assets from JTC Corp. CapitaLand also bought over Ascott Group for US$622.5 million, according to Thomson Reuters.

Mr Pirie said acquisition activity in the real estate market showed underlying confidence in the sector, particularly in the value of commercial property in Singapore.

Also on the top 10 list is the takeover of Straits Trading by The Cairns, a subsidiary of Tecity owned by the late Tan Chin Tuan's family. Mr Pirie noted that 'the recent drop in markets has presented a buying opportunity for controlling shareholders looking to accumulate interests'.

Going forward, Mr Pirie believes that the buying activity will continue to grow. 'Singapore firms need to continue the push to access new markets, most notably in Asia-Pacific, and are in the fortunate position of having strong balance sheets to do so.'

This view was backed by the other corporate finance banker. He pointed out, however, that the market would see fewer mega- deals such as those struck by GIC. The sub-prime crisis had created opportunities for such large purchases, but similar deals may not come by this year.

Within Asia, China led the way in acquisitions as its companies spent US$39.7 billion on 580 deals up to April this year. Acquisition value jumped 135 per cent from the year-ago period.

This article was first published in The Business Times on May 2, 2008.