Australian public market shows long-term structural shift, HSF says

Global giant breaks down the trends that show a sea-change in the nature of Australia's public markets

Australian public market shows long-term structural shift, HSF says

Two trends last year show a long-term structural shift in the nature of Australia's public market, Herbert Smith Freehills (HSF) said in a report.

In its “M&A in 2020: The New Normal” report, the global legal giant said that the M&A sector in Australia last year was robust with a high number and value of announced deals, despite a decrease from the heights achieved in the 2018 fiscal year.

HSF said that it observed “a material expansion in the bidder universe,” which drove both deal volumes and values.

The first trend the global firm noticed in Australia was the increased participation of superannuation funds, including AustralianSuper and the Queensland Investment Corporation, in high-profile takeovers, including for Healthscope, Navitas, Pacific Energy, and Superloop.

The firm has also observed that there was a marked uptick in the participation of private equity sponsors in Australian public M&A. They were involved in 20% of the deals in fiscal 2019, compared to 18% in 2018 and 10% in 2017.

There was significant activity in the sectors of financial services; aged care and health; technology, media, and telecoms; infrastructure; and energy and resources, the firm said.

HSF also said that it continues to see escalated regulatory scrutiny. This is partly driven by the Hayne Royal Commission’s findings, but it has now also expanded beyond banking and financial services.

HSF said that it expects a strong M&A sector in Australia in 2020. It said that the abundance of bidders is in part driving increased competition for assets, which will continue the development of new deal technology that balances providing certainty to preferred bidders and the facilitation of auctions.

In terms of deal structures it sees continuing to thrive, HSF singled out “go shop” provisions, process deeds, bidder commitments to support superior proposals, and concurrent schemes and takeovers.

Beyond Australia, HSF expects the M&A market in 2020 to feature more focus on environmental, social, and governance matters. It also expects to see more activity in public-to-private bids, continuing the spike of these transactions in 2019. HSF also said that the rise of political intervention is expected to continue, and that third-party deal disruption will continue to play a key role in dealmaking.

Related stories

Free newsletter

Subscribe to our FREE newsletter service and we’ll keep you up-to-date with the latest breaking news, cutting edge opinion, and expert analysis affecting both your business and the industry as whole.

Please enter your email address below and click on Sign Up for daily newsletters from Australasian Lawyer.

Recent articles & video

HFW lures construction expert and team from Colin Biggers & Paisley

‘Lawyers are critical in the workplaces of the future,’ study reveals

Baker McKenzie elects new APAC chair

‘Find and have confidence in your authentic voice,’ Ashurst lawyer says

Two new justices take the bench at the High Court

Ex-US bar presidents join the call for safe voting during the US elections

Most Read Articles

Macpherson Kelley's inaugural CEO to retire

Holman Webb and Madgwicks Lawyers strengthen workplace practices with new partners

Corporate finance specialist expert joins K&L Gates partnership

HWL Ebsworth marks strong October with successful assistance on major deals