Recent transactional trends in Australasia have included much activity in the leveraged loan market for acquisition financing as unitranche facilities have become an increasingly significant financing option since traditional banks are not as active as they once were. However, while the private equity mid-market continues to be very active, it is hard for the mega deals to get off the ground as there has been a string of rejected takeover bids – the most recent being the rejection of a proposed $13 billion takeover of APA Group by Hong Kong-based CK Infrastructure Holdings.
Project finance remains as hot as ever with a variety of projects and public-private partnership (PPPs) arrangements underway in areas such as infrastructure, mining, energy and renewable energy.
There has been a lot M&A activity, which is being driven by opportunistic consolidation and ancillary work off the back of that in areas such as acquisition financing and debt issuances. A lot of dealings in Australia looking for an exit embark on a dual-track process but often end in trade sales since the IPO option is not popular due to lack of demand and price expectations.
In the debt capital markets there has been an emergence of a green bond market and also social impact bonds that are government-supported and enjoy a lot of appetite from the banks.
In restructuring and insolvency, there has been a lot of positive restructuring work in mining services, but also a lot of stress in the retail, real estate, and construction industries.
Looking at the legal market specifically, in the past few years new international firms have been making inroads into the Australian legal market. For example, White & Case raided Herbert Smith Freehills in 2016 for a 10-partner projects team to launch offices in Melbourne and Sydney; and in mid-2017, Henry Davis York ceased to exist after Norton Rose Fulbright returned to merge with the Australian domestic firm to create the second largest global law firm in Australia.
Dentons is among the more notable, relatively new arrivals. In 2016, Dentons attempted to merge with the whole of Australian independent firm Gadens, which had seven financially distinct offices including five in Australia, one in Singapore and one in Papua New Guinea. However, this didn’t fully materialise as Gadens’ Adelaide, Brisbane and Melbourne offices opted out of the merger and continued to operate as Gadens. However, this year Dentons returned to strengthen its east coast presence in Australia by raiding independent DibbsBarker and acquiring 17 of its partners and other staff. This led to the capitulation of DibbsBarker which closed after 130 years in the Australian legal market.
Such developments have prompted consolidation in the mid-market that intensified in 2018 as HWL Ebsworth and TressCox Lawyers merged to create Australia’s largest legal partnership; McCabes Lawyers and Curwoods Lawyers combined to form McCabe Curwood; and most recently, Thomson Geer acquired Kemp Strang to create Australia’s fifth largest independent law firm.
The waters have been a lot calmer across the Tasman Sea where New Zealand has a small, independent and stable legal market. It’s full of familiar names that cover a broad range of practice areas, and within this constrained setting competition is high. Because of its small size and the strength of the local market, international firms prefer to refer matters to the stronger domestic firms. Traditionally, the market has described Bell Gully, Chapman Tripp and Russell McVeagh as the ‘big three’ perched atop the legal market. However, this perception is increasingly being challenged by the claim that it is only the perception that creates the distance and that it’s not matched by reality. Firms such as Minter Ellison Rudd Watts and Buddle Findlay are working hard to narrow the gap.