Herbert Smith Freehills
predicts that Australia will see less M&A activity coming from China but more from the North America in 2017.
The assessment comes as HSF makes its annual 10 Australian M&A predictions, which also includes a warning of mixed M&A levels due to a myriad of factors.
According to the top firm, leveraging concerns may be driving renewed scrutiny on outbound acquisitions by Chinese firms, suggesting muted activity from the country in2017.
“We expect this to be a focus of the first half of 2017,” the firm said, but added that “Australia remains a friendly destination for foreign and Chinese investment, and this is likely to remain so as other developed economies apply their own renewed focus to foreign investment.”
North America will be a brighter spot, however, as the firm predicts the region will continue to invest in Australia, continuing its 40% contribution to deal value in public M&As in Australia in FY16. This is predicted to be true on both US and Canada fronts.
“We think 2017 will see a continued focus on Australia from US and Canadian companies and funds. Business deregulation in the US is an area of common ground for the incoming Administration and Congressional Republicans,” the firm predicted.
Nonetheless, HSF warns that factors such as the Brexit, the Trump presidency, the Italian Referendum vote and the rise of minority parties will fuel uncertainty in FY17.
“In particular, the role that these events will have in a globalised and interconnected world economy can be seen as a key driver to what the next few years of growth will look like. Mixed economic activity levels around the world combined with political uncertainty should result in mixed M&A activity levels in Australia,” it said.
“Some major deals throughout the year will prove highlights to a good but not outstanding vintage,” it added.
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