5 things to note in APAC Mergers & Acquisitions for November & December 2022

Here are the final five M&A highlights for 2022. Get in touch if you would like to be added to the distribution list for more of such quarterly updates.

1. 1bn plus deals

We have seen an increase in enquiries for W&I insurance on large deals in sectors including infrastructure, energy and agriculture. Certain insurers in our APAC market are unable to provide primary terms on deals above 1bn which limits options. With the current state of flux in APAC M&A insurers (there are a number of underwriters that are currently between jobs or have recently started in new shops), advisers on large transactions should consult us early to check which insurers are allowed to offer terms on a deal and which insurer has the personnel to enable it to provide the cover required. We regularly structure insurance towers to reach the required level for large transactions and can explain the process as required.

2. Synthetic warranty successes

A synthetic W&I policy allows a buyer to get warranty cover on transactions when the seller is unwilling or unable to give any warranties at all (even warranties capped to USD 1). The insurer gives the warranties directly and uses the buyer’s diligence and the dataroom to give it comfort that the warranted areas have been reviewed and evaluated. The lack of disclosure is a challenge for insurers and they will often look for a form of seller involvement, even a simple confirmation that the warranties look acceptable. We have secured synthetic policy terms on Indian infrastructure and South East Asian operating entities. This cover is at the edge of what is achievable in the market. Advisors that are looking for a form of cover where the seller cannot give warranties can look to this alternative but should approach with caution and seek early advice on what is available.

3. New names, new insurers

As referenced in 1bn plus deals, we have a number of new insurers that have recently opened, opening soon or actively pursuing talent to start their presence in Asia. This is an exciting time for the insurance market, with increased competition we expect a push on pricing and cover. Advisors should expect to see new insurer names in NBI reports and should stress test that the recommended insurer is adequately prepared to give the right cover in a good timeframe. 

4. Title in APAC renewables

The title insurance market is big business in Europe and increasingly in the US. Title insurance offers a well-priced option for covering title to real estate and title to shares. A leading title insurer has a team dedicated to looking at APAC assets and is actively searching for projects to insure. Renewables developments across Asia could benefit from this coverage option. Real estate title challenges in Taiwan, Vietnam, Cambodia, Japan, Philippines etc. are all potentially insurable. Title policies last for as long as the owner holds the asset, a wider coverage period than parties get from W&I. A developer that is looking for a greenfield site or is about to start on a shovel ready asset could find a lot of value in insuring the risk of a challenge that stops the project.  

5. Get a recommendation

One of the best times to drive for coverage on a transaction is at quote stage. Insurers should be pushed to commit to covering areas before they get the diligence and before they know that they have “won” the deal. This is when competition is at its most fierce with an insurer wanting to get itself ahead of its rivals. Brokers must demonstrate that they have performed this work and that they are confident in the coverage that can be achieved. A broker report without a recommendation on who to proceed with is no good to a client who is looking for advice rather than an overview of the market. Advisors should push their broker to explain their work, get a recommendation and proceed only when the answers are acceptable. 

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