Merger and acquisition activity in Asia has slowed in the year to date compared to 2013, according to data from Dealogic, but recruitment consultants in the region report solid increases in hiring mandates, driven mainly by the increase in outbound M&A flows from China.
Deal values for Asia, excluding Japan, clocked in at US$290.5 billion in 2013, with 6,182 transactions reported. This is a decrease in recorded value of about 14%, while the number of deals is down sharply by a quarter against the year-ago figures.
Marc Burrage, regional director of Hays in Hong Kong, said the firm had seen a slight increase in the number of newly created jobs. “There is still a steady flow of candidates in most areas due to previous redundancies and reorganisation plans.”
But, he said, the investment banking market had been less active this year. “There were fewer senior hires this year. Most of the replacement headcounts are at the analyst and associate level for candidates with strong cross-border deals experience. The challenges in the IPO market had a large impact on hires in corporate finance and the equity capital markets sector in Hong Kong.”
Analysts and associates with strong modelling skills and exposure to the equity and debt capital markets would be in demand, as banks look to beef up their cross-border capabilities. “The focus is on experience working on M&A and IPO deals.”
The Singapore market was focusing this quarter on replacement hiring. The demand for contractors had also started rising, Burrage said, with banks hiring interim staff until they were able to make permanent hires in 2014.
Stella Tang, director and Robert Half in Singapore, said that even though M&A volumes in Asia were lower in 2013, this did not mean employment activity was too.
“We continue to see strong demand for M&A professionals as well as people with a good track record in investment banking. Much of the hiring is driven by the growing Asian banks, which are more than making up for a lack of activity by European and North American banks.”
Tang expected this continue into 2014. “Asian banks will to continue to recruit as they expand both the breadth and depth of their services. Investment banks will continue to hire M&A professionals as they compete to get the best people on their team. M&A-related hiring activities will remain strong, as will recruiting for corporate finance and project finance roles.”
Dealogic’s recent research indicated that while overall Asian (ex-Japan) M&A was weaker, this had been offset by a steep increase in outbound M&A from China, with volumes reaching a record US$60.8 billion in the year-to-date, 22% higher than in the same period in 2013.
The main destination for China’s outbound M&A was the US, with US$12.6 billion in deals in the year-to-date, almost double the US$7 billion in the same 2012 period, and again, the highest year-to-date volume on record. Deals focusing on the US were closely followed by Australia and Kazakhstan with US$10 billion and US$5.2 billion respectively.
The advisor league tables in the year-to-date were dominated by Goldman Sachs, with US$14 billion in deals, followed by Barclays and Morgan Stanley with US$12.1 billion and US$10.8 billion respectively.
All the recruiters polled by eFinancialCareers reported robust activity related to mainland banks.
Burrage, again: “A number of banks in China are aggressively expanding their operation hubs in the country, and this continues to fuel an active recruitment market. In addition, an increasing number of permanent vacancies is being created in the investment banking industry in response to the recovery. There are more candidates being hired at a junior analyst level than in previous periods.”
The spanner in the works had been the Chinese government’s decision to halt ‘A’ share IPOs in the past year, which had forced a number of companies wanting to go to market to investigate Hong Kong and other markets as alternative destinations for listing, or to plumb the debt capital markets to raise additional funds for operations and expansion.
“As a result, banks are competing with each other in terms of what they can offer, and a wider variety of structured products is being introduced to cater for increased customer demand for more complex financial solutions,” Burrage said.
Robert Half’s Tang said banks (and by implication, recruiters) were waiting to see the speed and extent to which China would deregulate its economy. “This is especially true for the financial sector. Many are also watching to see the impact of the Shanghai Free Trade Zone (FTZ). The short term impact of the FTZ is hard to predict, but it may well have a significant impact on other financial centres like Singapore over the longer term.”
Karl Franzmann, associate director at Michael Page in Hong Kong said the firm was seeing a notable increase in demand for talent from Chinese firms who were building their M&A teams, many for the first time.
“Although it may be a new business for them, they already have mainland clients lined up, ready for deals. These firms are less worried than the bulge brackets about hiring, and they have been taking on retrenched bankers, hiring exceptional talent they would not otherwise have been available.”
Hudson’s Hong Kong business was also seeing hiring activity by Chinese investment banks, which were staffing up particularly in the equity capital market divisions.
“But it's difficult to say how much of this is due to de-regulation and how much with strategy already in place to build their presence outside of mainland China,” added Hudson's Mark Andrews.