Consolidation activity in the Asia-Pacific cybersecurity market fell 12% year-on-year in 2022, driven primarily by global market volatility and looming recession fears, according to a report by GlobalData.
Last year saw 44 mergers and acquisitions in the region’s cybersecurity space compared to 50 in 2021. The number was still below the 64 consolidation deals in 2020, the year the pandemic hit, highlighting a downward trend.
According to Aurojyoti Bose, Principal Analyst at GlobalData, the heightened interest in the cybersecurity space in 2020 could be due to a sudden shift to remote working that necessitated the need for matured cybersecurity solutions.
“However, due to recession fears, acquirers appear to have become cautious and are being forced to revise their M&A strategies in 2022. GlobalData also found that some serial acquirers, who undertook multiple acquisitions in 2020 and 2021 , are slowing their M&A activity in 2022,” Bose said.
GlobalData’s report highlighted Australian-based cybersecurity group Tesserent Ltd’s low M&A activity in 2022. The report highlighted that the company acquired four cybersecurity companies in 2020, two of those companies in 2021, but none in 2022.
Cybersecurity is part of the broader deep tech or deep tech sector, which has attracted a lot of investor interest lately.
In an interaction with VCCircle earlier, BV Naidu, managing partner of StartupXseed Ventures, said that in the deeptech space, investors are increasingly optimistic about its growth in sectors such as aerospace, cybersecurity and health, among others, compared to a few years ago.
In another report from GlobalData, the APAC region saw a decline in deals across the board, including venture capital funding, private equity, and M&A deals amid general economic sluggishness. ecosystem due to recession fears and market volatility. Deal activity, including all three segments, fell nearly 6% in November 2022.
While venture funding in the region was down 3.5% year-on-year, in terms of volume; The number of APAC private equity deals fell about 24% in 2022, while M&A activity fell 6.2% over the period.
“The decline could be attributed to subdued activity in several key APAC markets as volatile market conditions weigh on trading sentiments,” Bose said earlier.
The decline in deal sentiment was most pronounced in Australia, Hong Kong and Malaysia. India, along with Japan, South Korea and Indonesia re-emerged in the region between January and November last year.