Australia sets M&A record as dealmakers revel in rebound

Australia has been blocked from other parts of the world for the past two years, Sydney Airport has been hungry for a constant flow of tourists, and expatriates and migrant workers have returned due to the closure of borders.

However, even if the number of passengers has decreased by more than 75% compared to the pre-blockade period, a consortium of infrastructure-hungry funds remains. Bold A $ 22 billion offer Get the airport in July.

The offer culminated Recommended bid of A $ 23.6 billion (US $ 17.5 billion) One of three major transactions that raised the Australian merger and acquisition to record levels in 2021 in November.

Bankers and lawyers said the M & A boom was different from what they’ve seen so far, with a deal of A $ 380 billion agreed in Australia in 2021, with a 10-year average of A $ 100 billion, according to Refinitiv data. It states that.

Marissa Freund, Head of M & A for Goldman Sachs in Australia and New Zealand, said:

Record M & A in countries that have introduced some of the world’s toughest blockades was not driven by opportunistic buyers who take advantage of weak markets. Instead, it is catalyzed by low funding costs, stagnant demand for transactions after the 2020 transaction decline, and economic recovery. The increase in private capital and the strategic shift by the country’s huge old-age pension fund also created a wave of activity, forcing buyers to offer large premiums.

Australia’s largest airport celebrates record year

Until this year, the Sydney Kingsford Smith Airport, named after a famous Australian aviator and considered the Holy Grail of the country’s infrastructure assets, was previously considered too large for local buyers.

The Sydney Airlines Alliance, a consortium led by Melbourne-based IFM partners and New York-based global infrastructure partners, bid three times before achieving the largest cash acquisition in Australia’s history.

However, this transaction was quickly overturned by two more record-breaking transactions. Twitter co-founder Jack Dorsey has started a payments company, Square, which has agreed to acquire a fintech company. AUD 39 billion postpaid, The largest acquisition of an Australian company in early August.Immediately after that, the mining group BHP Consolidate oil assets The merged business was valued at A $ 41 billion in a deal with Woodside.

Trading has not stopped. On October 17, five potential deals totaling A $ 10 billion were announced.These included Aristocrat Leisure’s consent A $ 5 billion transaction to buy British gaming software company Playtech; shopping center owner Aventus has been sold to real estate company HomeCo Daily Needs Reit for A $ 2.8 billion. South Korean steel maker POSCO offered A $ 815 million to buy coal sea gas producer Senex Energy, but the bid was later raised.

Crown Resorts, a casino group managed by billionaire James Packer, is another Australian asset being sought after by US private equity firm Blackstone. Crown rejected the $ 6 billion offer, but the suitor opened the books to carry out due diligence.

Playtech website over the phone
Aristocrat Leisure signed an agreement to acquire British gaming software company Playtech in October © Charlie Bibby / FT

Valen Joey, an investment bank backed by Barclays in the UK and Magellan in Australia, was founded a year ago to ride the wave of M & A.

Erin Tinker, head of M & A at Barrenjoey, who was involved in the Sydney Airport transaction, said the “Mega Deal” increased the average acquisition size in 2021 from an average of A $ 1.3 billion over a 10-year period to A $ 3.8 billion. .. Acquisition premiums rose to an average of 44%, a record high, compared to 33% between 2015 and 2020. “It’s certainly the most active market I’ve been to for 20 years,” she said.

Old-age pension funds help drive spikes

Australia’s buyout enthusiasm is used by huge old-age pension funds (A $ 3 trillion in the country’s pension sector), which are aggressively targeting listed companies, and bidders looking for scarce assets It is partially driven by the amount of unused capital that can be made.

As a result, we were forced to change our approach by super funds, which started to form teams targeting listed companies. For example, Aware Super and Macquarie Infrastructure & Real Assets (MIRA) have joined forces in June to acquire telecommunications company Vocus for A $ 3.5 billion.

According to Tinker, private capital is increasing the volume of M & A, accounting for 36% of transactions, compared to a 10-year average of 25%.

This year's Australian tycoon

Luke Bentvelzen, co-head of infrastructure and technology at Barrenjoey, added that half of this year’s transactions, including the oil merger with BHP’s Woodside, are being driven by decarbonization and digitization trends. .. “Companies are reweighting for higher growth segments,” he said.

The acquisition raises concerns that Australia has been carefully selected from the largest and best companies. But Bentvelzen argued that there would be a good IPO pipeline next year. Hotel booking software company SiteMinder should surge 38% in its debut last month, boosting its value by more than A $ 1 billion and bolding other tech companies looking for ups and downs, he said.

Some boards also resisted the urge to sell. Australia-listed electronics company Altium has rejected an A $ 5 billion bid from Silicon Valley rival Autodesk this year and has since traded well above the asking price.

Freund said the argument that the Australian stock exchange was cleanly chosen was “not really piled up”, but despite concerns about rising inflation and potential interest rate hikes, the M & A boom. Is expected to continue until 2022. “I don’t think it will stop soon. It may last for a long time,” she said.

Additional report by Arash Massoudi in London

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Australia sets M&A record as dealmakers revel in rebound Source link Australia sets M&A record as dealmakers revel in rebound

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