M&A in ASEAN, how is the channel changing?

M&A in ASEAN, how is the channel changing?

Cloud and software expertise in high-demand

Credit: Channel Asia

The channel in ASEAN has increased mergers and acquisitions (M&A) activity in 2019, driven by a need to build out specialised capabilities.

Since the start of 2019, more than 10 channel-related deals have been made at a regional level, in addition to over 25 industry-related transactions across the world.

Local partners have predominantly gone to market in search of expertise across cloud and software solutions, in addition to security and data centre capabilities.

M&A activity in ASEAN remains low in comparison to the Australian channel for example, which engaged at an average rate of one deal every four days at the start of 2019. But despite this, patterns are emerging within the local ecosystem as partners chase new markets, customers and technologies.

From a price tag perspective, the most noteworthy deal was 8x8 entering into the communications platform-as-a-service (CPaaS) market through the acquisition of Singapore-based Wavecell.

In a US$125 million deal - including cash and stock - the acquisition is designed to enhance the vendor’s offerings within the service delivery space, alongside APIs for SMS, chat apps, voice and video.

Specific to industry impact, NTT officially launching to the world as a global technology giant housing the capabilities of 28 companies in July did not go unnoticed.

Headquartered in London, the $11 billion business will be spearheaded by Jason Goodall and comprises of NTT Communications, Dimension Data and NTT Security, employing around 40,000 staff in offices across more than 70 countries and regions.

Channel Asia also confirmed that John Lombard has been named as CEO of Asia Pacific. Effective 1 July, Lombard is responsible for NTT’s global business in Asia Pacific, excluding Japan and Australia.

Cloud and software

From a cloud and software standpoint, key acquisitions include Cloud Comrade, Synchrony Global and RightCloud in Singapore, alongside ISS Consulting in Thailand, Plaut IT in Malaysia and Ebiz Cipta Solusi in Indonesia.

In January, Rizing snapped up Synchrony Global, an SAP SuccessFactors professional services specialist headquartered in Singapore, with offices throughout the Asia Pacific region.

Two weeks later, ST Telemedia acquired cloud start-up Cloud Comrade, leveraging the provider’s specialist expertise to bolster multi-cloud and digital capabilities.

Channel Asia exclusively revealed that the Singapore-based cloud firm - with presence also in Indonesia and Malaysia - will help the strategic investor capitalise on increased digital transformation adoption, specifically within the enterprise space.

Five days later, EY acquired specialist SAP consulting and technical services provider Plaut IT along with its local subsidiary EchoJunction and Malaysian subsidiary, Baseliner.

The acquisition added 130 people to EY's technology services, marking the consultancy giant’s third "digital" acquisition in the space of seven months.

In February, SoftwareOne took control of Singapore-based cloud service provider, RightCloud, for an undisclosed amount.

Since its inception in 2015, the cloud specialist has expanded its operations into seven countries and nine cities around Asia Pacific while promoting its multi-cloud strategy, and offering a range of services including managed services, cloud security, big data, business analytics, DevOps, application development and SAP on Cloud.

Meanwhile in April, Japan-based Information Services International-Dentsu (ISID) acquired a 75 per cent equity stake in Ebiz Cipta Solusi, an Indonesian independent software vendor.

Transacted through local subsidiary ISID Indonesia, Ebiz specialises in the development of third-party software solutions as well as the provision of technical support services.

More recently in July, global SAP specialist itelligence AG acquired ISS Consulting in July, as the subsidiary of NTT Data Group builds out software capabilities in Thailand.

Based in Bangkok, ISS Consulting is one of the leading SAP consulting firms across the country, focusing on manufacturing, automotive, retail, and food and beverage industry sectors.

Prior to 2019, in early December of 2018, JCurve Solutions acquired Spectrum Partner Group, a specialist Oracle NetSuite partner based in Singapore.

Spectrum Partner Group was established in 2013 and has a customer base spanning across Singapore, Australia, the UK and South East Asia.

Data centre

Within the data centre, four notable deals took place during the first six months of the years, starting with Iron Mountain acquiring Bangkok-based InfoZafe in June, providing the US-based storage vendor with additional reach across Thailand.

The agreement is designed to expand the company’s presence and capacity for service delivery, while providing an additional facility in Bangkok.

As a result, the transaction brings the total number of Iron Mountain facilities to five and total cubic feet of storage to four million, adding more than 210 customers and 19 employees to the vendor’s existing business.

During the same month, ST Telemedia Global Data Centres (STT GDC) acquired the remaining 26 per cent stake of Tata Communications in STT Tai Seng, comprising of three colocation facilities in Singapore.

The agreement came two years after STT GDC entered into a strategic partnership with Tata’s data centre business in Singapore and India, holding a 74 per cent majority stake across both markets.

Upon closing of the deal, STT GDC will now own 100 per cent of the facilities in Singapore, while the strategic partnership structure remains unchanged in India.

In early July, Princeton Digital Group (PDG) acquired a 70 per cent stake in XL Axiata’s data centre portfolio in Indonesia, amid increased in-country digital spending.

Operating as the second largest national telecommunications provider, XL Axiata owns five data centres across Indonesia.

The joint venture - named Princeton Digital Group Data Centres - will enable Singapore-based PDG to establish a “strategic presence” in Indonesia, which is poised to become the largest digital economy in Southeast Asia by 2025.

The new entity will be a carrier-neutral data centre operator with the ability to "scale significantly" to serve hyper-scalers, domestic unicorns, enterprises and telcos.

Most recently, Bain Capital-owned businesses ChinData and Bridge Data Centres merged operations to create a “pan-Asian” data centre platform in the region.

New parent company - ChinData Group - will continue to operate under the ChinData and Bridge brands respectively and provide hyperscale, wholesale and custom-build data centre solutions to regional and global customers, with facilities in China, India and Southeast Asia.

The company has currently delivered over 100 MW of contracted capacity and is still under "continuous and full-speed development".

Acquired by Bain Capital in May 2019, ChinData is a Chinese operator of campus-style, hyperscale data centres while Bridge Data Centres - owned by the private equity firm since 2017 - is a wholesale and custom build data centre business.

Notable deals

Rounding off the M&A activity in ASEAN, DXC Technology acquired the global services centre of Sime Darby Berhad in Malaysia in May, backed by a long-term managed services agreement.

The transaction sees the technology giant take control of the Sime Darby Global Services Centre (SDGSC), the in-house provider of its HR, finance, accounting and IT services.

Meanwhile, Future Data acquired a majority stake in Maximus Group Consulting in June, a Hong Kong-based cyber security consulting firm, as part of in-market growth plans.

The share purchase and subscription agreement brings the system integrator's equity stake in the business to 64.86 per cent, comprising of 24,000 sale shares and the subscription of 24,000 new shares.

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