Surge in M&A activity set for 2010, says Freehills

Financial services is one of the sectors expected to benefit from a surge in mergers and acquisitions (M&A) in 2010, according to M&A law firm Freehills.

“Heightened momentum in takeovers and schemes is the next logical move following the hectic capital markets agenda that dominated 2009,” said corporate M&A partner Rebecca Maslen-Stannage. “We expect M&A deal flow to pick-up significantly in comparison to last year’s lower levels, as strong companies that have raised capital have positioned themselves for future growth. Now that confidence has returned, the focus of corporates is returning from survival to growth.”

The financial services sector, along with strategic, high quality resources and property assets, is expected to benefit from strong interest from foreign investors. Maslen-Stannage said foreign investors have taken note of Australia’s apparent resilience during the global financial crisis.

“Foreign capital will continue to be attracted to Australian companies for quality and safe investments,” she said.

“Strategic international players will look to strengthen or extend their foothold, with foreign buyers looking for key infrastructure assets. This trend commenced with the Canadian Pension Board’s interest in Macquarie Communications Infrastructure Group and Transurban. We expect to see a high demand for safe and quality investments and we anticipate renewed activity and consolidation in the real estate and investment trust, technology, insurance and property markets.”

She added that another driving factor behind the surge in M&A is that key cornerstone investors who came to market in 2009, which included Warburg Pincus, China Investment Corporation and Brookfield, will be looking for their investee companies and entities to be active.