Australian M&A: Market to warm up in 2024

The Australian M&A market was subdued during 2023 with changing market conditions impacting investor confidence and also making it more difficult for buyers and sellers to align on appropriate transaction valuations. 2023 saw a number of proposed sale processes and public market transactions remaining incomplete, as well as very low public market primary equity issuance.

These conditions meant that many natural sellers (particularly private equity owners) pushed out time horizons for desired liquidity events. We expect conditions to become more balanced in 2024 and buyers and sellers to become more active in completing transactions, with numerous proposed processes mooted for 2024. We also expect corporate buyers to become more active as equity markets support inorganic growth opportunities – particularly if overall market growth slows.

In the mining sector, cost pressures and funding availability is creating conditions that support consolidation of mid-tier players. There also remains continuing corporate and private investor support to gain exposure to ‘future-facing’ minerals, despite the recent declines in spot prices.

In the infrastructure space there remains considerable capital available for opportunities – combined with a number of proposed sale processes driven by a number of factors (e.g. fund vintage, portfolio rebalancing etc). That said, we see a more cautious approach to pricing any volume/merchant exposure or operating risk. We expect to see a continued consolidation of the renewables sector, albeit perhaps at a reduced pace. Greenfield renewable financing to support the energy transition remains a significant ‘constant’.