Deal making with China in our new normal - Financial Advisory blog | Deloitte Australia has been saved
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We interviewed Australian corporate heads of M&A and identified key trends influencing deal activity and the expected impact of COVID-19 to their business in 2020. You can download our full The deal in focus report for data findings from our interviews and actionable insights from our M&A leaders.
Below, we share the highlights from our theme, Responding to COVID-19: Deal making and opportunities for M&A.
Following a period of unprecedented M&A activity in 2017 and 2018 buoyed by electricity privatisations and large-scale takeovers, Chinese M&A interest in Australia was subdued in 2019.
Given today’s circumstances, we could be excused for forgetting about the geo-political dynamics, tariff wars, central funding controls and changes to real estate investment conditions that stalled a continuation of this momentum through 2019. Asia is due for yet another turbulent year.
Key actions for Chinese investors into Australia
Key actions for Australian sellers to prepare for inbound investors
No growth predicted across Asia, but some will fare better
The International Monetary Fund (IMF) is now forecasting that the 'severe and unprecedented' impact of COVID-19 will lead to no economic growth across the region, but it is also predicting the impacts for some countries, such as China, will be less pronounced and shorter than their more developed global neighbours.
A number of key drivers will likely shape the landscape of Chinese investment into Australia over the next 12 months:
Notwithstanding the severity of the current economic situation, we see that some green shoots are already emerging. This may just be the catalyst that was required to change the way in which we engage with foreign pools of capital as we embrace the new normal.
Without doubt, we are due for a bumpy ride in the coming months as we emerge from the shadows of COVID-19 and transition to the ‘new normal’. As natural geographic partners, there should be a continued impetus for Chinese cross-border transactions — Australia has the resources and consumer goods that China requires and China has the foreign capital that Australia needs. The opportunity to harness our interdependence with China for the longer-term benefit of both economies remains significant.
Read the next blog in our M&A series on Capital raisings and defensive stratgies during COVID-19.
Or download our full The deal in focus report for data findings and insights from our interviews with ASX200 M&A leaders.
Marc is a partner in our Mergers and Acquisitions Transaction Services practice based in Melbourne. He has over 20 years of experience advising local and multinational clients. His primary areas of specialisation are commercial advisory, due diligence, pre-sale/capital raising assistance and SPA advice. Marc leads our IPO readiness market offering and has deep experience in advising on cross border transactions, with a particular emphasis on inbound investment from Asia.