Chapman Tripp expects a strong finish to a year which has already produced an unusual number of major listed company transactions.
These include the NZME listing and its pending merger with Fairfax New Zealand, Z Energy’s acquisition of Chevron’s New Zealand downstream assets, the Nuplex takeover and the Sky/Vodafone merger. Regulatory approvals, in particular under the Commerce Act, have been a key feature of many of these deals.
We are also now seeing a pick-up in private M&A activity after a relatively light first half compared with prior years. And, as the transaction window in calendar 2016 begins to close, more sales processes are starting to enter the market.
On the regulatory front, we expect to see tangible progress being made to improve the Overseas Investment Act approval process, which has been perhaps the main regulatory concern affecting New Zealand M&A over the past several years.
Below we highlight key themes we expect to characterise the remainder of the year.
Continued strategic activity
Building on an already-strong year for strategic activity, we expect a number of major strategic transactions to be announced before the year is up. Bapcor’s pending takeover offer for Hellaby is a recent example, and together with the partial takeover offer of Airwork by Chinese company RIFA represents a mini-boom in New Zealand’s typically quiet takeover market.
Overseas investment regime in for a tidy up
Improving the Overseas Investment Act consent process, including the functioning of the Overseas Investment Office (OIO), is now a government priority and this is delivering improvements in OIO service delivery. We expect a gradual improvement in application processing times as the OIO takes on additional staff.
Coupled with regulatory changes to address some of the more easily-fixed problems with the regime, we expect 2017 will be a year of general improvement for the OIO; a very welcome development.
Applicants for consent need to do their part by making sure that their applications are complete and meet the OIO’s requirements. In this regard the Office has published useful guidance material as part of its commitment to improve communication with stakeholders.
The China story rolls on
Despite predictions of a slow-down in the Chinese economy, we continue to see steady and significant Chinese direct investment into New Zealand. Rifa’s pending Airwork takeover offer and Joyvio’s acquisition of a 19.9% stake in Turners & Growers are but two recent examples of Chinese activity in New Zealand equity markets.
Prospects for 2017…
We expect that increased M&A activity will persist through the first half of 2017. We also expect to see sustained growth in buy-side private equity, as funds raised over the course of 2015 and 2016 continue to be invested.