Australia could very well be the best market for M&A legal work, according to new figures released by Thomson Reuters.
The findings state that from January to August this year Australian companies have been the most favoured M&A targets, with 1,146 deals worth US$84bn. By comparison China had 1,690 deals but lagged behind with its total value of US$64bn.
The Australian energy & power sector managed to capture 27.3% of overall M&A activity, with deals worth a total of US$27.7bn. Financials companies were the second most sought-after takeover targets, the sector raking in US$21.9bn (21.5%), while resources came in third with US$18.6bn (18.3%), pushed by the BG Group-Origin Energy and St George acquisitions.
When asked about the findings, Cameron Price, a partner at Allens Arthur Robinson, pointed out that the recent deal value statistics are substantially driven by the top three announced deals, involving Origin Energy, St George and Asciano.
“What this shows is while debt might be more expensive these days than 12-18 months ago, debt and equity funding is still available for major M&A transactions where the fundamentals of the deal are strong,” said Price.
“This is demonstrated by the recently announced CSL deal, where I have been assisting CSL raise the necessary equity and debt funding. In recent times industry buyers have also been more competitive in terms of IPOs and PE, due to higher debt funding costs, weaker equity markets and in some cases greater synergy potential,” he added.
The Australian private equity (PE) market performed well (up 16.4%) despite an overall decrease in the Asia-Pacific region (down 12.7%). Australia’s PE volume peaked at US$10.2bn, of which US$7.2bn represented the acquisition of Asciano Group by TPG Capital and Global Infrastructure Partners.
Price believes that there is real potential for an upturn in PE: “Many PE firms are quite cashed up and looking for the right opportunities.”
Cross-border acquisitions targeting Australian companies reached almost US$43bn, representing a 24.9% increase. However, Australia's cross border outbound volume has decreased by 58.5% to US$13.8bn.