Covid-19 travel bans ‘put offshore deals on hold’

Covid-19 travel bans are hindering Australia’s economy, which relies on the free flow of people and trade across domestic and international borders.

Covid-19 travel bans are stopping international business deals from taking off. Picture: Nicole Garmston

International travel bans are limiting Australia’s access to the global economy, with businesses passing over potential “job creating” deals because they can’t “get their arms around” takeover targets overseas.

It comes as Victoria spent the weekend under its fourth lockdown to contain the spread of coronavirus, delaying a return to some kind of normality and unrestrained dealmaking. The seven-day shutdown is expected to cost more than $1 billion.

Business leaders have urged all eligible Australians to get the Covid-19 vaccine to prevent another large-scale outbreak and further damage to the economy, saying high vaccination rates are the key to recovering fully from the pandemic.

Writing exclusively in The Australian on Monday, Westpac chief executive Peter King said vaccines were the critical piece of the puzzle.

“Given the need to help protect our families and friends when further outbreaks occur as well as the economic costs to communities, we need as many Australians as possible to get vaccinated as fast as possible,” Mr King says.

Craig McNally, chief executive of Australia’s largest private hospital operator, Ramsay Healthcare, said while there was confidence about the future that didn’t mean things were back to normal across Australia.

“I think the vaccination rates have a significant impact on getting back to normal for all the obvious reasons,” he said.

Ramsay last week lobbed a $3.7 billion takeover bid for British rival Spire Healthcare, aiming to become Britain’s dominant private hospital operator. But the blockbuster proposal overshadows several deals that Mr McNally said the company has not pursued, citing international travel bans.

“We have passed on a number of acquisitions over the last 12 months because we couldn’t get our arms around it.

“And so we’re being cautious about, as we always are in acquisitions, about making sure we understand the business, making sure we understand the culture of the business that we’re buying.”

Mr McNally said the Spire bid was an exception, given the company had been on Ramsay’s radar for the past 10 years and it was already in the British market, having launched there in 2007.

“If there was an acquisition to come up in the US now, that’d be a really difficult thing for us to get our arms around.

“I think the priority for us of having opportunities in markets in which we were currently operating was the right thing to do.”

Westpac CEO Peter King. Picture: Jane Dempster

Australian Investment Council chief executive Yasser El-Ansary said while the Australian government’s management of Covid-19’s public health crisis had been “world-class”, it risked letting the country down in the “last few steps of this long road back to normal”.

“In a sporting sense, it’s the equivalent of us all having played the game of our life for the first three quarters of the game, and now we’re taking our foot off the gas for the last quarter – we can’t afford to do that. We have to keep running until we hear the final siren,” Mr El-Ansary said.

“There’s a building sense of frustration around many in the business sector that the government is not doing everything possible to squash the ongoing Covid-19 risks to our public health and our economy.

“The view is that we need to implement a better long-term strategy for quarantine and we must accelerate the pace of vaccine rollout for all age groups around the country.” Mr El-Ansary said Australia’s economy relied on the free flow of goods, services and people across domestic and international borders. While borders remained shut, so did parts of the economy.

“Because we are not able to fully engage in the international economy right now, there is a clear limit on the volume of investment deals being completed and therefore a handbrake on the creation of new jobs,” he said.

Qantas chairman Richard Goyder called for more Australians to be immunised against Covid-19, saying accelerating the vaccine rollout was the only way to open borders.

He said Qantas lost $2.7 billion last year and “with what is going on in Melbourne we will lose more than $2 billion this year”.

“The way forward has to be as quickly as we can to get people vaccinated and that will help us safely open domestic borders and open international borders,” Mr Goyder said.

“We (have to) roll out the vaccine as quickly as we possibly can. That means people doing it even if they don’t think they need it. Doing it for the community, doing it for their family and their friends.”

But Telstra Ventures chief financial officer Geoff Dolphin said the pandemic had also given companies an opportunity to embrace remote working, which can also work in international acquisitions.

He said Telstra Ventures – which was founded in 2011 and spun off two years ago as an independent venture capital fund – had invested more than $US100 million ($129.4 million) in a variety of deals in the past year, proving border closures didn’t necessarily stymie corporate activity.

“It can be done,” Mr Dolphin said.

“We are a little bit fortunate as well. We’ve always been designing ourselves as a global operation.

“We have investment professionals in San Francisco, in Shanghai.

“The three major markets that we invest in descending order: USA, China and Australia.

“The US is pretty much opened up. China has been opened up for a long time now. But even in the real hard times of Covid in terms of maximum lockdown periods, we were still able to do a number of deals.”