Australian private equity strong in 2016
Australian private equity (PE) had a strong year, with merger and acquisition activity jumping from four per cent to 20 per cent, and has been driven by the healthcare sector, MinterEllison's market analysis said.
According to the "Directions in Private Equity 2016" report, a key highlight in 2016 was the healthcare sector while, at the same time, the PE activity was on an upward curve for much of FY2016.
As far as the FY2017 forecast was concerned, the report confirmed that health and allied services would remain the hot sector as well as child care which would receive a boost thanks to a favourable government policy.
MinterEllison also expected turnaround and transformational capital funds to be active across a number of sectors, including ‘experiential' businesses such as tourism, hospitality, fitness and wellness.
Additionally, the increased PE investments were expected in 2017 in technology companies.
According to MinterEllison's partner, Ricky Casali, the trend of investment partnership models with co-investment deals were also gaining momentum in the market.
He said that increasing fee pressure was causing superannuation funds to seek direct access to privately owned businesses with growth potential while, at the same time, a lower Australian dollar and a low interest rate environment was fostering strong competition for assets.
"We expect that this increased competition will force the typically sector-agnostic private equity investor to either pay higher multiples in hot sector or strategically consider more creative opportunities in alternative sectors," he said.
"Sectors traditionally attractive to venture capital, such as life sciences and information and communication technology, will continue to grow due to increased capital availability and support courtesy of the Australian Government's innovation agenda, offering PE funds a strong pipeline of potential investments."
Recommended for you
In the latest Meet the Manager profile, Money Management speaks with Michael Skinner, founder and managing director at Blackwattle Investment Partners.
Perpetual has seen AUM rise 6 per cent in the last quarter but the departure of a longstanding JOHCM fund manager led to outflows of $2.2 billion from his strategy.
Global fixed income fund Bentham Global Opportunities has been added to several major platforms, enabling it to be accessed more easily by financial advisers.
Following yesterday’s news about First Sentier Investors closing four investment teams, a second global asset manager has announced it is closing its only dedicated Australian fund.
