What is the outlook for private capital in New Zealand mergers & acquisitions?

The outlook is for continued strong M&A activity in the near term but risks are accumulating. Private equity firms are still writing big cheques.
Chapman Tripp report on trends and insights for New Zealand Mergers and Acquisitions.

2018 was a good year for M&A activity, both globally and in New Zealand, with strong demand from cashed up buyers and generally benign economic conditions providing a tail wind.

The outlook for 2019 is for continuing high buyer interest, buoyed by the opportunity to obtain high-value acquisitions in a slightly less seller-friendly market.

In New Zealand last year, PE firms invested US$2.55bn across 19 deals (skewed by the Trade Me deal worth US$1.88bn) and divested US$618m. Chapman Tripp expect the buying trend to continue, with a particular interest in financial services businesses, aged care, healthcare, Internet of Things and business services.

NZX has put in place a number of initiatives to foster New Zealand equity capital markets and the IPO market is tipped to improve in 2019 and 2020, which is likely to bear on the assets on offer for PE buyers.

We are also reaching the end stage of the “lifecycle” for some PE investments, and it may be that PE sellers revert back to exiting by IPO or dual track processes instead of by trade sale. Several PE firms, both in New Zealand and Australia, had a strong fundraising year in 2018 and will be looking to deploy capital in quality deals.

Read the full report from Chapman Tripp

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