Legal experts predict M&A boom

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Asia Pacific regional deal values are up a whopping 41 percent year on year, consistent with a global upward trend for Q1 2015, according to the latest Global M&A Review released by Dealogic.

Australia has become the third most targeted country in the Asia Pacific region (excluding Japan) by deal volume. While the report found that Australia’s deal volume was up by 13 percent year on year, it has dropped in rank, finally surpassed by Hong Kong and China for the first quarter of this year.

Mike Barker, King & Wood Mallesons lead M&A partner said the upward trend is likely to continue in Australia given the stability of the economy.
“I think the whole Asian region is on a continued uplift in terms of GDP growth,” he said.

“I think the trend is broadly likely to continue in the second half, because the underlying macro-economic conditions and business confidence I think are reasonably similar,” Barker observed, adding that he is cautiously optimistic about the M&A market for the remainder of the year.

As an advanced and fairly safe place to invest within the region, Barker said the drop in Australia’s interest ranking was disappointing, but not totally unsurprising.

“It’s a bit disappointing we’re slipping now because we used to be typically number one but now China and Hong Kong have taken over in terms of size and volumes and that’s just a feature of their growing economy,” he said.

Unlike the US M&A market, which is dominated by domestic deals, the Australian market is still dominated by overseas interest.  Barker said the infrastructure and broader real estate sectors are likely to shape the Australian M&A market over the second half of this year. 

“We know that the country has readily acknowledged now that there is a large amount of spend needed on new infrastructure in this country and that will be attractive to investors around the world,” he said.  “It’s slightly less on recourses and slightly more now on real estate which is the next phase. Infrastructure and privatisation of infrastructure assets will be very key.”

He noted that Australia has seen interest from Asian investors in Australian hotels and interestingly leisure and healthcare.  While there has not been a significant level of M&A activity in the healthcare sector, interest in the industry does appear to be brewing.