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Singapore, Malaysia, Indonesia make tech their third most-invested sector, says report

TECHNOLOGY-RELATED venture capital deals amounted to 16 percent of total investments made by Singapore, Malaysia, and Indonesia in the first half of 2016, making technology the third most-invested sector across the three countries, according to a new report.

U.S.-based corporate finance advisory firm Duff & Phelps says investment in technology has dropped from last year’s 25 percent in Singapore, Malaysia and Indonesia, as it continues to lag behind the industrial and BFSI (banking, financial, insurance services) sectors.

The report, titled ‘Transaction Trail’, covers mergers & acquisitions (M&As), private equity and venture capital investments (PE/VCs), and initial public offerings (IPOs) in the region.

The technology category includes sub-categories such as “hardware, semiconductors, software, design, manufacturing and distribution of technology, technology services”.

According to Tech in Asia, the report, while vague about specifics on the tech startup sector’s performance, is a “small testament” to the diverse industries that tech startups are targeting.

However, there were no significant tech-related IPOs in the first half of 2016, highlighting a concern that tech startups get stuck in a rut and are unable to expand past a certain point.

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Singapore recorded the most M&A deals, with 591 secured in 2015 valued at US$101.2 billion. External deals accounted for over 80 percent of the total transacted value. Domestic deals, on the other hand, contributed only eight percent of the total deal value – a significant drop from 2014, when domestic deals contributed 24 percent.

Malaysia recorded 331 M&A deals, valued at US$8.9 billion. In contrast with Singapore, domestic deals accounted for more than half of the total transacted value.

The lowest M&A transaction value falls on Indonesia, which only recorded a total of US$1.6 billion in M&A deal values, falling from US$5.1 billion in 2014.

Srividya C. Gopalakrishnan, managing director of Duff & Phelps Singapore, said: “The first half of 2016 has given us mixed signals with slowing growth in the developing markets, modest growth in the mature markets, fear of interest rate hikes, possibilities of recession in certain economies, but at the same time [we are] witnessing a robust M&A and investment climate.”