Chapman Tripp’s M&A – trends and insights report for 2016 expects another strong year of M&A activity in New Zealand, following on from a good year in 2015.
“2016 has begun strongly with several significant deals either completed or in progress – the offers for Diligent and Nuplex, The Blackstone Group’s purchase of Lendlease’s New Zealand retirement village portfolio, TrustPower’s proposed spin-off of its solar and wind assets and Fletcher Building’s acquisition of Higgins.
“We expect this momentum to roll on, with a focus on the aged care, telecoms, primary products and energy sectors”, said Tim Tubman, a partner at Chapman Tripp specialising in M&A and co-leader of the firm’s China Desk.
Key drivers expected to propel M&A growth in 2016 include:
- strong private equity interest, bolstered by newly raised, hungry Australian and New Zealand funds – potentially bringing more competition to the market, to the benefit of New Zealand vendors
- continuing demand for New Zealand assets from China, and general offshore interest stimulated by a weakening Kiwi dollar
- access to plentiful bank financing, although the cost of borrowing is now likely to be on an upward curve, and
- more flexibility around takeover mechanisms.
“Although steps are being taken to improve matters, strong M&A volumes will put pressure on Overseas Investment Office timeframes. We’d encourage the government to increase the Office’s resources and continue to look for efficiencies in the OIO process”, Mr Tubman said.