NZ M&A Predictor: Issue 9 | KPMG | NZ

NZ M&A Predictor: Issue 9

NZ M&A Predictor: Issue 9

New Zealand’s M&A market remains resilient, with deal volumes up 14% in the first half of 2016 – while offshore corporate take a conservative stance in light of global uncertainties.

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Local M&A market remains resilient amid global uncertainties

New Zealand companies are continuing to show a healthy appetite for M&A deals – while the rest of the world takes a more conservative stance in response to various global uncertainties.

The October 2016 report showed a ‘business as usual’ approach for M&A in New Zealand; in contrast to large shifts occurring at the macro level. Globally, corporates are have reduced net debt levels, and are a showing a marked slow-down in completion rates of M&A transactions.

Key findings from the October 2016 M&A Predictor:

  • In contrast to large shifts in the global market, New Zealand’s key indicators remain stable. Market confidence has softened slightly (down 3%); while capacity has increased slightly (up 1%).
  • This compares to a 4% drop in confidence globally, and 7% across Asia Pacific. Global capacity has risen 12%, and 19% across Asia Pacific (measured by net debt/EBITDA). Foreign corporates are taking a fairly conservative stance in response to various global events – such as Brexit, the upcoming US election, uncertainty around interest rate rises and sustained pressure on oil prices.
  • Further, we’ve seen a slow-down in the number of deals actually completing offshore – down 14% - consistent with messages we’ve had from our colleagues offshore that many deals are being “parked” or taking longer to achieve a successful outcome.
  • New Zealand deal volumes were up 14% for the first half of 2016. Sustained level of deal activity is a reflection of New Zealand’s robust economic performance, coupled with little activity in the IPO market given sustained market volatility.
  • Strong consumer confidence and retail spend statistics, as well as dairy prices picking up more recently, are all important factors contributing to New Zealand’s GDP growth of 3.5% for the recent June quarter.
  • New Zealand sectors performing particularly well recently include building materials and tourism. This is a reflection of strong fundamentals such as population growth, strong net migration to New Zealand, and of course a very strong residential and non-residential construction pipeline for the next 10 years.

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