Dealmakers forecast strong M&A deal making down under
Mergers and acquisitions in Australia are likely to continue at their present robust pace for the next 18 months, say senior dealmakers at an Australian British Camber of Commerce lunch hosted by ansarada.
A strong stock market, low acquisition financing costs and slow to moderate economic growth will help propel deals during the rest of 2015 and beyond, say a private equity executive and a M&A banker.
“It’s a positive M&A environment,” says Fiona Lock, a director at CHAMP Private Equity, which has raised A$2.95 billion through three buyout funds and is seeking to raise a fourth fund. “Conditions are pretty good for private equity investing.”
Companies such as Woodside Petroleum and Wesfarmers can borrow money at annual rates of between 3 to 4 percent, according to Charles Graham, managing director at boutique M&A advisory firm Gresham Partners. Slow to moderate economic growth is making chief executives and their boards more comfortable in their forecasts as they try to grow their sales through M&A while cutting costs to boost profits, he says.
M&A transactions on average equate to about 6 percent of the stock market, according to Mr Graham. The S&P/ASX 200 Index has gained 9.9 percent in the year to date.
“As equity inflates in size so does the value of M&A,” says Mr Graham.
ansarada has opened more than 200 Australian data rooms in March and April, evidence that M&A deal making down under is healthy.