Todd loves what he sees in Asia

After two months in Asia (having relocated from the US), Todd Marin, JPMorgan''s new M&A boss, is buoyant on the prospects.

You arrived in Asia two months ago from the US, what's your sense of the M&A scene here?

Marin: It is a very interesting contrast to come here from North America right now. I'm sure those people who saw the boom in Asian M&A are still looking at the market and are saying it is not what it once was. What's interesting for me, is that the feeling here û as I go out and see clients and as we're working on transactions û is much more positive than what I am seeing in North America. In fact, the contrast could not be more stark.

In the US there is still a tremendous lack of confidence in the economy, and all the noise around financial reporting makes the environment there very challenging for M&A. Todd Marin

Whereas in Asia, I don't see the distractions that exist in the North American market here at all. I see much more optimism and CEOs are more willing to look at ideas and do deals.

Have clients pointed out to you that they worry that a lot of the M&A in the US has destroyed shareholder value, and they are wary of jumping into M&A?

Clients haven't raised that point particularly. It's not that they shouldn't, as you can look at what's happened in the US and say, was the US market overheated? I'll give you an example, in 1999 we sold an emerging technology company to an established technology company for US$1.5 billion. In 2001 we resold the same company for US$300 million. That would very much support your point.

Largely this did not happen in Asia, so clients aren't looking at that so much. I also haven't seen clients focusing on the financial reporting issues currently troubling the US.

The first six months of the year haven't been great for Asian M&A. Do you have a sense the second half will be better?

It's a relative thing. Are the arrows pointed upward right now in Asia? No. Are the markets coming off the most robust M&A markets ever, and as such are comparative measures risky ? Yes.

On a relative basis I believe Asia is doing quite well, both in terms of the volume of transactions and in terms of the number of transactions. In both cases Asia is down less than elsewhere.

Bloomberg's data shows the number of transactions in Asia having increased in the first six months versus the same period last year. More interestingly, I believe that the volume of transactions in Asia has grown as a percentage of global volumes from 5% to 15%. And the number of transactions in Asia over the same period have increased from 15% to 25%. In other words, Asia is becoming more relevant in the global M&A market.

What trends are you seeing?

What's going to drive M&A volumes globally? Clearly, CEO confidence is important. So if the economy turns around, M&A turns around û because CEOs have to be comfortable with their own business before going out and buying another one. Having said that, as the economy bumps along at its current level, companies are going to be put in a position where they need to do M&A transactions even in a weaker market.

In the past eight weeks we've had some of the top 25 global companies come over to Asia to survey the M&A potential in this region, whether it be in China, or more broadly in the region. These companies are looking at the economy in North America and the potential for near term growth there and are turning to look at Asia, and seeing the opportunity for growth here. Again, on a relative basis Asia is looking much more interesting.

How do you see Japan fitting into the overall M&A scene in Asia?

We look at Japan in a way that integrates it more and more into Asia. Historically there hasn't been a great deal of intra-Asian M&A between Japan and some of the other countries in the region. We are seeing û and I am involved in an example right now û where a Japanese client is looking very hard at the China market. You look at the main technology players. You ask, have they outsourced their manufacturing? They've done some of it, but not all of it. And so they become interested in China in this regard.

Our dialogue with our counterparts in Japan is very active.

What you have to understand about the JPMorgan franchise is that we have 22 offices in 15 countries, and an M&A presence in four locations (Australia, Singapore, Hong Kong and Japan). We've chosen to cover this market broad, because it is a market where there are shifts û whether from North Asia to South Asia, from Japan to China. We don't have to guess where the next great market is going to be, because we have the market covered with M&A people and we have local people. Others who are looking at this market in a much more opportunistic way, and move in and out of markets, they have to guess where the next market is and that's like trying to guess the bottom or top of a stock market û you are always going to be a little bit late.

Are there too many M&A bankers chasing too few deals in Asia?

On the contrary, looking at my team, I find I'm running into resource constraints. Most of my people are running full out, and I am starting to look at ways to increase my capacity to market, because all my people are actively executing.

Also we've been out talking to clients over the past few weeks, talking about acquisition ideas and we've been getting a lot more receptivity. Why? Stock prices are down, so there's great value and there isn't a lot of competition out there to buy assets. And some folks will realize they have to get together because the end market isn't as big as they thought. So in many ways these are excellent times for clients to too to grow through M&A.

Share our publication on social media
Share our publication on social media