From Breakingviews: Private equity firms are shifting resources to Australia. The country’s stumbling economy will leave many companies ripe for buyouts. That means M&A battles – once inflation, rates and debt markets settle, says AntonyMCurrie
, has doubled its private equity headcount over the past couple of years. CVC returned to the country in 2021, nine years after losing $1.8 billion when television network Nine Entertainment, which it bought just before the financial crisis, went bankrupt. EQT now has around 50 staff just three years after setting up shop.
The economic slowdown should provide plenty of new targets. Commercial real estate is one area: pension funds AustralianSuper, Australian Retirement Trust and Cbus, reduced their property portfolio’s book value by up to 15%. Consumer companies will be under pressure, too, as accumulated savings deteriorate and spending slows.
There are some hurdles to clear, though. The downturn is probably only in its early stages, with the pain from the 4-percentage-point increase in interest rates over the past 14 months yet to flow through. And chances are central banks will add to that by raising interest rates again to fight inflation, despite the Reserve Bank of Australiaand the U.S. Federal Reserve last month eschewing a hike.
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