EY expects M&A activity to ramp up as foreign investors eye SA’s high growth industries
A STRONG pipeline of deals in the technology, health and manufacturing sectors has stimulated mergers and acquisitions activity in South Australia in the first half of this year, according to professional firm EY.
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A STRONG pipeline of deals in the technology and health sectors has stimulated mergers and acquisitions activity in South Australia in the first half of this year, according to professional firm EY.
And a further ramp up in activity is expected, according to EY, as the state’s small and medium size businesses respond to renewed foreign investment interest in the state’s high growth industries.
EY director Peter Panatsos said mergers, acquisitions and capital raisings across a range of sectors had supported the strong start to the year.
“We have seen strong M&A activity in South Australia across the board in the first half of 2018, both at the big end of town with OZ Minerals’ takeover of Avanco Resources and Accolade’s sale to The Carlyle Group, and also in the middle market,” he said.
“Middle market activity has been particularly pronounced in the technology, media and telecommunications (TMT) and health & biotechnology sectors.
“A deep pool of financial and strategic investors seeking deals in the health sphere is expected to continue, underpinning valuations and therefore deal activity in that sector.”
Mr Panatsos said a growing pool of international investors was circling opportunities to invest in the state’s high growth sectors, particularly in cases where “a close strategic fit is evident”.
Last month, joinery manufacturer IJF Australia agreed to sell a 47 per cent stake to China’s ZBOM Cabinets, while Salisbury South-based manufacturer Climate Technologies was acquired by Indian air-conditioning giant Symphony.
Mr Panatsos said access to foreign capital was becoming an increasingly attractive proposition for local small and medium size business owners, particularly for those who were planning for succession or seeking rapid growth.
“Large and publicly listed companies mostly see M&A opportunities as a core aspect of their growth strategies,” he said.
“Middle market and family businesses have historically been more reluctant to explore such
opportunities as a result of scepticism around taking on growth capital or the fear of the unknown.
“However, with broader international and financial investment occurring in SA, the landscape is beginning to fundamentally change, and previously sidelined businesses are becoming increasingly open to exploring opportunities in recognition of the important role transactions play in company growth.”
EY has shaken up its transaction advisory team since the departure of the firm’s former managing partner Don Manifold earlier this year.
Senior partner Ben Bishop has returned from the firm’s Canberra office to head up the transaction advisory division, while Mr Panatsos joined the firm earlier this year as a director in its merger & acquisitions team.
Meanwhile Mr Manifold, who parted ways with EY in March following breaches of the firm’s code of conduct, has joined corporate advisory firm Equity & Advisory as joint managing director. He shares the role with Mark Vartuli and continues to advise boards through Manifold Advisory Partners.