Capital raisings have in the past year, excluding the last quarter, largely been driven by clients’ need to shore up balance sheets. 

But Andrew Pike, corporate and M&A partner at Freehills, told The New Lawyer that “some of the more recent capital raisings that are occurring are to give funding to acquisitions and the like”. 

The recent spate of capital raisings may signal an upcoming increase in mergers and acquisitions, Pike claims.

Pike says recent capital raisings have been “more about funding for growth and acquisitions”. 

More clients, particularly in the resources space and in financial services, are preparing for future growth, he said. 

He predicts an increase of the recent move to more traditional and strategic M&A, and a return of the IPO market. “In some of those cases the capital raisings have been used to provide funding for future acquisitions.”

But Corrs Chambers Westgarth M&A partner in Sydney, Braddon Jolley, said today he doesn't agree we're moving so quickly towards capital raisings being related to acquisitions. 

"I don't see it," Jolley said. "Go back a couple of years, people increased debt and reduced equity and so they have high-leveraging companies. As a result of the global financial crisis that has moved. Now you see companies de-leveraging by changing their debt to equity ratio. Most of the fund raisings that I have seen at the moment relates to that."

Jolley says we're still a while off the majority of capital raisings being related to M&A. "A little relates to acquisition work, but it tends to be the exception rather than the average or the common thing now. So I figure, if we do well, we're still 12 months away from equity work being primarily related to acquisitions."

Freehills partner Tony Sparks, however, said earlier this year that July’s Australand Property Group’s entitlement offer to raise $475 million, typified a new “vogue in capital raisings”. It signaled a move to prudent capital raisings, where issuers don’t have an impending date to pay down their debt or refinance their facilities. 

“But they are putting money away for a rainy day and for when markets might improve,” he said. 

Capital raisings, from the middle of this year, moved from being a last resort for companies and funds wanting to raise money, said Spark. 

Freehills has this year acted on the Ten Network capital raising in August, the Goodman Group’s plans to raise A$1.8 billion to strengthen its balance sheet, and Servcorp Limited’s capital raising, acting for the underwriter while Mallesons Stephen Jaques advised Servcorp.