PE Horizons 2020

Banking & Finance Financial Services Mergers & Acquisitions Private Equity

Record levels of capital and a turning market for Australia

It's a new decade for private equity (PE) in Australia. After a drop in activity in 2019, we expect both buyside and exit activity levels to pick up considerably in 2020.

PE houses have amassed a record amount of unspent capital. This has resulted in a continued healthy deal flow, with sponsors looking to pursue an increasingly diverse range of asset classes, investment models and execution strategies.

Key takeaways

  • Carve-out opportunities remain ripe for PE bidders: They continue to have a competitive advantage over corporates and other bidders in carve-out transactions, due to their agility and experience grappling with complex separation issues.
  • Data opportunities and risks are on the rise: This is impacting the headline price, risk-allocation profile and the value ultimately realised from M&A transactions in all sectors.
  • Term loan B exceeding traditional bank loans: This is likely to continue, particuarily in the private equity buyside, and the cycle into capital deployment. 
  • Transformational bolt-on activity: This is facilitating accelerated growth and rapid entry into new markets, but it is not without material risk, particularly around integration.
  • The IPO market is changing: There will be challenges for private equity-backed listings, but we think there will also be opportunities for sponsors to successfully exit quality businesses via an IPO at the right price.
  • New fees and costs disclosure regime to impact private equity: ASIC's fees and costs disclosure regime has flow-on consequences for PE funds and underlying portfolio companies in which Product Issuers invest.

Our private equity team reports on key trends and sectors to watch in 2020. Sharing their thoughts and predictions on what's to come for the industry, with a particular focus on: data, investments, leveraged finance and the domestic and global market. Watch the videos below to hear more of their insights. 

Views from our team

Noah Obradovic discusses domestic and global sponsors' decision making and key strategies for 2020.

Jessica Mottau focuses on the growing importance of data in PE transactions, and the opportunities and risks data presents.

James Kanabar examines the continued focus of investments in Australia in 2020.

David Couper looks at the growth in the Australian leveraged finance market.