Investors get a taste for Australia
Australian companies are increasingly attracting potential buyers as the economy diversifies and North American investors are drawn to industries like infrastructure, says Goldman Sachs’ local head.
Interest in the Australian market, particularly from the US and Canada, is rising, says Simon Rothery, chief executive officer for Australia and New Zealand.
“We have witnessed significant investment in sectors like healthcare, education and technology services,” says Rothery. Basic materials and energy targets accounted for only 6.8 per cent of acquisitions in Australia last year, the lowest level in at least a decade, compared to 40 per cent in 2011, according to Bloomberg.
Australian companies announced US$76.1b ($109b) of cross-border mergers and acquisitions last year, with the largest proportion involving US buyers, according to the Bloombergcompiled data.
Goldman Sachs ranked fourth among advisers on such deals, behind Macquarie Group, Gresham Partners and Morgan Stanley.
The biggest acquisitions in Australia are now targeting industrial and utilities companies. Canadian pension funds have scoured the country for stable, long-term returns in infrastructure as Australian states sell off assets to fund construction of new roads, railways and hospitals.
Caisse de Depot et Placement du Quebec was part of a group that agreed in 2015 to buy a New South Wales electricity network, for about A$10.3b. Canadian funds have also joined deals for the Port of Melbourne and logistics operator Asciano.
“Over the past five years, the Australian market has become less correlated to the commodities sector,” Rothery says. “The interest in Australia from North America — and particularly Canada — is strong.”
Consumer and healthcare assets in Australia have also been attracting takeover interest. China’s Luye Group, Jangho Group and stateowned China Resources have
The interest in Australia from North America — and particularly Canada — is strong. Simon Rothery, Goldman Sachs
acquired assets including private hospitals, an eye-clinic chain and a cancer therapy provider as they seek medical know-how to take home.
American underwear maker Hanesbrands worked with Goldman Sachs on its purchase of Australia’s Pacific Brands last year for about US$800 million including debt. The investment bank also advised Melbourne- based vitamin brand Swisse Wellness on its A$1.39b sale to China’s Biostime International, announced in 2015.
Goldman Sachs wants to expand its investment activity in Australia, says Rothery. It has spent A$2.5b in the past four years and wants to double that over the next three years, he says. The firm’s investments in the country include Atira, a student accommodation j oint venture. Goldman Sachs also joined a funding round for Singapore data centre developer AirTrunk, which plans to use the proceeds on projects in Sydney and Melbourne. — Bloomberg