Private equity dominates public mergers and acquisitions

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Private equity dominated Australian public mergers and acquisitions (M&A) in financial year 2019, a new report reveals.

In the 11th edition of its annual Australian Public M&A Report, Herbert Smith Freehills (HSF) said that, of 63 announced deals for FY2019, amounting to a total deal value of $45.9bn, 21% of deals involved a private equity bidder, marking a significant increase from 18% in FY2018 and 10% in FY2017.

HSF said that three out of four targets of competitive bids for fiscal 2019 were subject to bids by private equity investors, with these bidders interested in both small and large deals. These investors also dipped their toes in various sectors, such as energy and resources, consumer, health care, and IT/telecommunications.

“Our low interest rates, the low Australian dollar, and lower levels of political unrest compared to private equity’s typical regions of interest such as the US and Europe, make Australia an increasingly attractive destination for private equity investment,” HSF partner Paul Branston said.

Several deals involving private equity bidders have recently made their rounds in the news. In June, Brookfield Business Partners announced that it had closed its acquisition of Healthscope for $4.35bn, prevailing over a consortium of investors led by private equity firm BGH Capital. King & Wood Mallesons advised Brookfield in that deal. In May, KKR closed its offer to pay $2bn to acquire the remaining MYOB shares it did not own from Bain Capital. Gilbert + Tobin acted for KKR on that stake acquisition.

The success rate of private equity deals in FY2019 sits at a comfortable 75%, according to HSF the report.