Funds' appetite for ports, railways to stoke Australia M&A fervour

Thu Jan 7, 2016 12:31am EST
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* Australia M&A totalled $146 bln in 2015 vs $117 bln in 2014

* Long-term investors seen interested in govt asset sales

* Inbound deals were $59 bln 2015 vs $38 bln in 2014

By Byron Kaye

SYDNEY, Jan 7 (Reuters) - Blockbuster buyouts of ports and electricity networks are poised to drive Australia M&As in 2016 from four-year highs of $146 billion hit last year, as wealthy global investors seek steady yields amid shaky commodity and share markets.

Investment bankers predict that offerings of well-tested government assets and cheap money will lure conservative-minded long-term investors into deals, even as a sputtering Chinese economy hits demand for Australia's natural resources.

Pension funds such as the Canadian Pension Plan Investment Board and sovereign wealth funds such as China Investment Corp, the Abu Dhabi Investment Authority and the Kuwait Investment Authority have already invested in Australian assets and could be prominent players in the new government sales.

"There's a massive amount of money looking for yield," said Geoff Rasmussen, managing director of Azure Capital, which helped telecom iiNet sell for $1.2 billion in 2015 and earned the 10th highest mergers and acquisitions (M&A) advisory fees for the year, Thomson Reuters data shows.

"Bank deposits and fixed income opportunities are so low-margin that people have turned to infrastructure as an alternative."   Continued...