Date
19 October 2017
Financial services, industrials and real estate are among the businesses most likely to see a rise in corporate restructuring. Photo: Internet
Financial services, industrials and real estate are among the businesses most likely to see a rise in corporate restructuring. Photo: Internet

Corporate restructuring seen rising in Asia amid China slowdown

Corporate restructuring activities, including layoffs, acquisitions and asset sales, are expected to increase in the Asia-Pacific region over the next 12 months amid uncertainties in the global economy and an economic slowdown in China, according to a survey conducted by advisory firm AlixPartners.

About 36 percent of the 150 respondents in the survey said corporate restructuring is likely to “increase significantly” while 57 percent expected such activities to “slightly” increase in the region over the period. 

A similar survey conducted last year showed that 70 percent of the respondents expected a slight or significant increase in corporate restructuring activities, compared with 66 percent in 2013.

In the latest survey, almost 40 percent of respondents said China’s slowing economy would contribute to increased restructuring activity.

Alleviating debt and other cash-flow issues is another major concern cited by the respondents who included lawyers, bankers and fund managers.

Industries most likely to experience a rise in restructuring activities are financial services, industrials, auto manufacturing and real estate.

Geographically, corporate restructuring is most likely to see an uptick in Japan, according to 97 percent of the respondents, followed by Australia and New Zealand (93 percent).

“There is clearly no single right solution for restructuring or for trying to emerge from distress,” Masahiko Fukasawa, AlixPartners managing director and co-head of Asia, said in the report. “The responses suggest a growing sophistication about the restructuring process.”

Acquisition was selected by about 90 percent respondents as the most likely restructuring tool. 

However, more than half of the respondents said the region is still less mature than the North American and European markets in terms of executing smooth corporate restructuring.

The “maturity of the market” includes the maturity of participants, said AlixPartners managing director Lim Lian Hoon.

He said the region has been enjoying robust growth for a long time, which means that a large portion of the market participants lack the experience of going through a downturn.

Insufficient supply of specialists, such as experts in the field of mergers and acquisitions, is another limitation of the region, Lim said, adding that regulatory and political factors also affect corporate restructuring.

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MY/JP/CG

EJ Insight reporter

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