M&A trends & insights - sellers' market for quality assets

2017 M&A: A SELLERS’ MARKET FOR QUALITY ASSETS

2 March 2017

A gap between the number of cashed-up investors and the availability of good quality New Zealand assets will see a sellers’ market in 2017, resulting in strong price expectations, Chapman Tripp predicts.

“There has been a tremendous amount of capital raised by investors both domestically and offshore that needs to find a home,” says Tim Tubman, who heads Chapman Tripp’s corporate team in Auckland.

“These investors include flush corporates, financial investors and private equity firms – typically astute investors who are on the hunt for good-quality assets. However, we don’t expect investors to buy for the sake of buying, nor bid assets up to unrealistic levels, as occurred prior to the GFC.”

This, combined with the continued availability of debt finance, a weaker New Zealand dollar, continued interest from Chinese investors and increasing role of iwi in domestic deals as they look to diversify their investments, will contribute to the imbalance between supply and demand for strong local assets, he said.

Recent M&A activity has been robust, with the year kicking off with ANZ’s sale of UDC Finance to HNA Group, Spark’s takeover offer for TeamTalk, the now-contested acquisition of Tower by Fairfax Financial Holdings and Tenon Clearwood LP’s purchase of Tenon’s New Zealand-based Clearwood operations.

Chapman Tripp has today released its annual publication – Mergers and acquisitions: trends and insights – which reflects on the previous year and identifies predictions for 2017.

“Despite heightened global and domestic uncertainty, we remain optimistic for M&A in 2017, but we do expect a slowdown in activity prior to the general election in September, and the year has already shown that regulatory intervention can and will have a major impact on transactions.”

2017_Chapman_Tripp_New_Zealand_MA__trends_and_insights.pdf

2017_Chapman_Tripp_ChinaNZ_MA_SUPPLEMENT.pdf

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