Mining to lead M&A in 2021 say Perth dealmakers
The West Australian
Tue, 9 February 2021 2:00AM
Prominent Perth dealmakers are forecasting a strong pickup in mergers and acquisitions over the next 12 months, after the coronavirus crisis put the brakes on deals across the nation.
Azure Capital joint managing partner Simon Price said there were already many indications of a strong pickup, including “rumours regarding activity going on beneath the surface”.
“At Azure we are seeing an increased level of inquiry and interest in opportunities that we believe is being seen across the market in Australia and internationally,” he said.
Mr Price, pictured, said he was not surprised, given both the pent-up demand after a pause last year and the strong equity markets giving boards more confidence to invest.
“We are definitely expecting more (M&A activity) in the Eastern States because it reflects a broader spectrum of the economy and the various sectors of the market,” he said.
Mr Price said he was expecting the strong run in mining to continue in WA.
He also noted there had been a shift from gold and iron ore to commodities that were more reflective of the broader economic recovery such as copper, nickel and lithium.
It comes as an annual dealmakers report released today by consulting firm Pitcher Partners revealed 75 per cent of dealmakers believe Australia’s economic recovery will be quicker and stronger than other markets in Asia Pacific. And 84 per cent were planning to complete a deal in Australia within the next 12 months.
A majority (65 per cent) said Australia’s mid-market (deals valued between $10 million and $250m) was superior to those in other markets, and 62 per cent expected Australian mergers and acquisitions would bounce back to pre-COVID levels by the end of this year.
Managing director at Pitcher Partners Perth, Leon Mok, said the key takeaway was the high level of confidence that the economic recovery in Australia will be materially faster than in other markets.
“This will position Australia as an attractive destination of deal-making despite the ongoing challenges of operating in a COVID-19 environment,” he said.
Last year, Australia reported 963 deals, a 20 per cent decline compared with figures for 2019 (1204 transactions).
The decline was not quite so precipitous in value terms, slipping 4 per cent to $94.3 billion from $97.7b in 2019.
The market disruption last year had led to a number of companies making decisions about their longer term strategy, King & Wood Mallesons Perth M&A Partner Nigel Hunt said.
“This is showing up as sales processes for certain assets and strategic acquisitions to either build scale or move into different areas which are seen as more prospective for the future,” he said. “Both of these will drive M&A activity in 2021.”