Introduction

We are pleased to share with you a summary update of market valuations and activities in the Asia Pacific Software industry for the first half of 2020.

Software is one of the key sectors in which Armor specializes in and closely follows market trends. Please contact us for a further discussion.

Valuations of Asia Pacific’s public companies have increased every quarter since Q2-2019. Median EBITDA was 44.4x by the end of Q2-2020 vs. 27.4x in Q2-2019 – an increase of 62% year-on-year.

Based on 400-500 selected companies, the table above illustrates that the industry returns have declined over the past few years. Meanwhile, although there is remarkable difference in industry margins between 2017 and 2018, it has remained relatively stable for the past 3 years.

M&A activity (majority stake only) by volume has maintained at 121 in H1-2020, an increase of 14% compared to the same period last year (there were 106 deals in H1-2019). Most of the deals were in the lower to mid-market segment, while 1 transaction drove most of the total transaction value in Q1-2020 (acquisition of Plaid Inc. by Visa Inc. at USD 4,900m).

Armor selected the largest M&A transactions across the region in H1-2020 for which information on Implied Enterprise Value were available. The most remarkable transaction was the acquisition of Creative Knowledge, a Singapore-based company which develops digital education products and solutions. (While the largest transaction was Visa Inc.’s acquisition of Plaid Inc., the relevant multiples of the transaction were private.)