corporate partner Andrew Matthews says conditions are ripe for strong corporate activity this year, continuing a trend seen in 2016.
“Capital markets saw strong secondary transactions. IPOs were softer than the market would like, with only three main-board listings – two of which were private equity exits. Takeovers are back on the cards – the most high-profile being Hellaby, Abano and, recently, Tower,” Matthews said.
Recently, Chapman Tripp
predicted that capital markets activity for next year may be flat, forecasting that 2017 may also see only three listings on the NZX
Main Board. However, Matthews appeared confident that other corporate activities might offset the capital markets slump.
Matthews said that huge deals announced in the private M&A space in 2016, including Solid Energy’s asset sales, the Sky-Vodafone and Fairfax NZ-NZME mergers, the sale of UDC, and ACC’s and NZ Super’s investment in Kiwibank, signal a healthy pipeline for 2017. It should be noted, however, that the Commerce Commission blocked Sky and Vodafone’s merger last week, which also cast doubt on the Fairfax NZ-NZME merger.
Another factor that could boost corporate activity this year is private equity, Matthews said.
He said that market conditions remain conducive for deal activity, and private equity in New Zealand and Australia are cashed up and ready for deals. Direct Capital, Waterman, Movac and Milford have all raised capital in the last six months in the country, Matthews said. Furthermore, quasi-governmental investors and Australian and global PE funds are exploring investment opportunities in New Zealand.
"However, asset quality is key – buyers are sensitive to protecting returns, looking for growth, and no one is prepared to over pay,” he said. “Where the quality isn’t present or the buyer/seller expectations are too divergent, we have seen some assets have been in-play for a long time.”
The sentiment echoed predictions recently made by MinterEllisonRuddWatts
, which said that though regulators will closely watch M&A in 2017, the sector is poised to have a strong year.
Chapman Tripp expects fewer NSX listings in 2017
MinterEllisonRuddWatts predicts sustained regulation in robust M&A sector this year