Australian private equity strong in 2016
Australian private equity (PE) had a strong year, with merger and acquisition activity jumping from four per cent to 20 per cent, and has been driven by the healthcare sector, MinterEllison's market analysis said.
According to the "Directions in Private Equity 2016" report, a key highlight in 2016 was the healthcare sector while, at the same time, the PE activity was on an upward curve for much of FY2016.
As far as the FY2017 forecast was concerned, the report confirmed that health and allied services would remain the hot sector as well as child care which would receive a boost thanks to a favourable government policy.
MinterEllison also expected turnaround and transformational capital funds to be active across a number of sectors, including ‘experiential' businesses such as tourism, hospitality, fitness and wellness.
Additionally, the increased PE investments were expected in 2017 in technology companies.
According to MinterEllison's partner, Ricky Casali, the trend of investment partnership models with co-investment deals were also gaining momentum in the market.
He said that increasing fee pressure was causing superannuation funds to seek direct access to privately owned businesses with growth potential while, at the same time, a lower Australian dollar and a low interest rate environment was fostering strong competition for assets.
"We expect that this increased competition will force the typically sector-agnostic private equity investor to either pay higher multiples in hot sector or strategically consider more creative opportunities in alternative sectors," he said.
"Sectors traditionally attractive to venture capital, such as life sciences and information and communication technology, will continue to grow due to increased capital availability and support courtesy of the Australian Government's innovation agenda, offering PE funds a strong pipeline of potential investments."
Recommended for you
Some 42 per cent of CEOs say they are actively reinventing their business to stay relevant in the next decade, with consumer services the most common choice for asset and wealth managers.
Former Ophir Asset Management chief executive, George Chirakis, has joined private equity manager Scarcity Partners, while the asset manager has appointed a replacement from Macquarie.
Australian Unity has appointed a fund manager for its Healthcare Property Trust, joining from Centuria Healthcare, as it restructures the product with a series of senior appointments.
Financial advisers nervous about the liquidity of private markets funds for their retail clients are the target of fund managers launching semi-liquid products which offer greater flexibility and redemptions.