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Private equity back in town

Leading M&A lawyer David Friedlander has painted a rosy picture for the Australian M&A market in 2011.Friedlander returned to Australia recently after attending the International Bar…

Leading M&A lawyer David Friedlander has painted a rosy picture for the Australian M&A market in 2011.

Friedlander returned to Australia recently after attending the International Bar Association (IBA) international private equity transactions symposium in London on 30 November, where he moderated a discussion on key topics in the Asian market.

The Mallesons Stephen Jaques partner told Lawyers Weekly that "Asia is the fad" for many global private equity consortiums at the moment, and Australia was well positioned to capitalise on that trend.

"Everyone wants to do work in China, with India behind that," he said. "China can be a very hard place to do work and India, while it's fascinating and the authorities are attempting to facilitate removing barriers to foreign investment, can still be terribly turgid.

"Australia and Indonesia are well positioned to attract interest on the back of that, due to its proximity to Asia and the fact that Australia is viewed as a reasonable place to do business."

The M&A specialist also poured cold water on the idea that a recent ruling by the Australian Tax Office that asset sales from private equity firms would be classified as income and not capital gains would significantly dampen the market.

"Many other jurisdictions in Asia have similar tax arrangements, such as China and India, so I don't think it will be too much of an issue," he said.

He also predicted that with the maturing of the private equity market, more players will be expected to enter and that law firms had to keep in touch with both the upper and mid-level players to be in the best position to get work from the next generation of consortiums.

Friedlander's comments come on the back of a similarly buoyant prediction for private equity work in Australia for next year from Freehills partners Neil Pathak and Tony Damian.

However, unlike the Freehills duo, who released a top 10 predictions report for M&A in Australia in 2011, Friedlander does not expect to see more Federal Court challenges from the boards of corporations to Australian Competition and Consumer Commission (ACCC) statements that put the brakes on proposed takeovers or mergers.

"You would have to be very, very careful to initiate such action," he said. "For companies that enter the market rarely or on a one-off basis, such challenges might be looked at, but for large organisations that are active in the market and value their relationship with bodies such as the ACCC, you would be very reluctant to put them off-side."

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