TSMP Law Corporation joint managing partner Stefanie Yuen Thio was quoted in a Business Times article on 03 November 2021, on the expected rise in distressed asset sales after the end of Covid-19 support measures.
Stefanie said “We have already seen the first wave of assets when an economic crisis exposes suspected illegal practices… but those affected by (Covid-19) are still to come.”
She commented that “over-leveraged businesses and sectors” that have been hit the hardest by the pandemic will be affected. She added that the “lucky ones” could be restructured by way of solvent mergers and takeovers on the back of a narrative of strategic corporate action.
“Honestly I haven’t seen a lot of distressed sales; but there should probably be a “yet” at the end of that statement, she said.
She also said “The deals we are seeing currently are for new businesses, emerging technologies and innovative businesses, strategic acquisitions like in the medical and educational spheres. They’re not companies in trouble. That wave may come soon.”
Private equity funds “flush with cash” or companies with strong balance sheets – especially those that have successfully restructured themselves – could be “well-placed to go shopping,” she said.
“The problem is that money was so freely available when governments opened national wallets to support businesses during the initial phases of the pandemic. So borrowing was cheap,” she said. “While debt is certainly in the picture, due to cheap borrowings, I’m seeing some securities swapping deals too.”
She stressed that foreign money has found its way to Singapore shores because of the way the country has handled the Covid-19 pandemic, and because US-China tensions have sent investors looking for a more neutral business environment.