Navigating Post-Pandemic Opportunities: Indonesian M&A Outlook & Insights

M&A hit a record high in 2021 and transaction momentum is expected to continue after the pandemic in 2022: PwC analysis

Jakarta, 16 June 2022 - IMF is targeting the global economy to grow by around 3.6 percent. In the first quarter of 2022, Indonesia’s economic growth surged by 5.01 percent (year-on-year/yoy), which was deemed as the largest growth in the ASEAN region.

The government’s support in maintaining a strong and sustainable economic recovery, as stated in one of the G20’s main agendas, is to provide stimuli for investments in Indonesia, which directly impacts the increase in M&A activities.

Today, PwC Indonesia held a webinar entitled ”Navigating Post Pandemic Opportunities: Indonesia M&A Outlook & Insights” to figure out the main considerations in implementing the suitable transactions and execution strategies for businesses, especially in the post-pandemic period.

On a global scale, in 2021, M&A performance set a record in terms of volume and value with the number of deal transactions surpassing 62,000, which increased by 24% from 2020.

In Indonesia, the number of M&A transactions have been fluctuating in the last 10 years with a significant decline in 2020 due to COVID-19. Throughout 2021, there were 103 M&A transactions, which surged by 186% compared to 2022 with a total transaction of US$44 million.

Michael Goenawan, PwC Indonesia Advisory Leader, said, “M&A growth in Indonesia is mostly generated by four main sectors, namely telecommunications and technology with a total transaction of by US$14.7 billion, followed by business services by US$2.7 billion, the transportation sector by US$2.2 billion, and lastly the energy, mining, and utilities sector by US$2 billion. This growth is inseparable from the encouragement and support from the government through changes in regulations and development plans, including infrastructure development.”

M&A activities are predicted to remain strong throughout 2022, even though there are market challenges and competition among investors, such as between private equity and venture capital companies. A positive investment climate and optimistic regulations provide strong support to the increase in transactions, capital inflow, and global interest in Indonesia. Business leaders need to understand their current business position and the best way to grasp transaction opportunities. Identifying the suitable transactions and execution strategies will optimise the value that can be provided to stakeholders.

Fabio Kusuma, PwC Indonesia Advisory Partner, added, “In an active M&A condition, the value is not only determined by the transaction price, but also by a cautiously considered value creation strategy since its pre-deal stage. The strategy that relates to repositioning, performance improvement, asset optimization, and other prominent considerations like ESG, will help investors actualise their full potential to improve their chances of a successful transaction.”