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Largest M&A deal of 2016 reaches completion

Largest M&A deal of 2016 reaches completion

Four firms have advised on the Ausgrid mega-lease, worth approximately $16.19 billion.

Firms: Clayton Utz (financiers, comprised of 15 banks, both on and offshore); Ashurst, Herbert Smith Freehills (IFM Investors, AustralianSuper); Allens (Ausgrid)

Deal: The partial lease of Ausgrid by IFM Investors and AustralianSuper.

Value: Approx. $16.19 billion

Area: M&A

Key players: Partner Dan Fitts led the Clayton Utz advisory team, with assistance from special counsel Tricia Moloney and Maria Ratner.

Deal significance: The long-term lease is Australia's largest M&A transaction to date this year, and the largest single payment that has ever had to be processed by the Australian banking system.

“That involved having to have discussions with the Reserve Bank and [others] to ensure that the banking system could handle it,” Mr Fitts told Lawyers Weekly.

“The Australian banking system at any one time only holds about $23 billion of liquidity, and our single payment was going to absorb over half of the Australian banking system on that morning, so that required a degree of coordination.”

The transaction saw the consortium comprised of IFM Investors and AustralianSuper acquire 50.4 per cent of the long-term lease of Ausgrid, with the NSW government retaining a 49.6 per cent stake. The proceeds of the acquisition will be used to fund part of the $20 billion Rebuilding NSW plan.

Looking to 2017, Mr Fitts said M&A in the infrastructure space looks fairly strong, with a number of privatisations getting underway early in the new year in Victoria and NSW.

“Our sense is that the next year is going to be quite active,” he said.

“Where it is still a little bit weak, I think, is in that mid-level M&A market.

“We are seeing a number of these really large, significant privatisations and M&A transactions but from what we can see, the volume of smaller to mid-sized deals that keep the market ticking along is probably not as strong as it could be.

“Otherwise we’re generally feeling quite confident that there will be a reasonable amount of work next year.”

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