An economic shift is already underway in Australia, according to the report, as mid-market technology, media and telecommunications (TMT) deals in 2016 overtake the number of mining asset acquisitions in the past year.
A summary of the Mergermarket report findings has been devised with accountancy and business advisory firm network Baker Tilly International, noting that dealmakers are approaching deal valuations in the Asia-Pacific region more cautiously.
The paper, entitled Dealmakers: Mid-market M&A in Asia-Pacific 2016, explains that this is due to a range of factors that have fed a climate of “economic uncertainty and volatility”.
Australia, however, was identified as “driving” M&A activity in the region. Low debt levels, as well as a stable and growing GDP in 2015, have put the country in its strongest dealmaking position since 2011, the report said.
“Australia attracts investors by its inherent economic maturity and political stability, strong regulatory frameworks with efficient and transparent processes, rule of law, robust equity markets and wealth of quality resource assets.
“Meanwhile, cash interest rates have remained low and the availability of cheap credit and equity capital has made deal financing easier, which is expected to underpin ongoing strong activity throughout the remainder of 2016 and into 2017,” the paper said.
The summary singled out Australia and New Zealand as showing “stable” rates of growth against a backdrop of economic maturity. Both nations are appealing to investors, who are confident in the protections offered by political stability, minimal chances of corruption and sound regulatory frameworks.
Another regional trend to emerge from the findings was the increase in Asia-pacific mid-market M&A, which grew its stake in the overall global activity in this space from 20 per cent in 2011 to 39 per cent in 2015. So far in 2016 there have been 107 Asia-Pacific mid-market M&A deals, worth a total of US$6.6 billion.
“The Asia-Pacific deal market has seen fewer headline-grabbing mega-deals and more deals in the mid-market, or deals valued between US$10 million and US$250 million,” the paper said.
The Asia-Pacific’s top-performing sectors for mid-market M&A transactions included industrials and chemicals, claiming a 22 per cent deal volume, and TMT, with a total deal volume of 17 per cent. The consumer sector was also a strong performer, according to the findings, with 11 per cent of total deal volume.