* Australia M&A totalled $146 bln in 2015 vs $117 bln in
2014
* Long-term investors seen interested in govt asset sales
* Inbound deals were $59 bln 2015 vs $38 bln in 2014
By Byron Kaye
SYDNEY, Jan 7 (Reuters) - Blockbuster buyouts of ports and
electricity networks are poised to drive Australia M&As in 2016
from four-year highs of $146 billion hit last year, as wealthy
global investors seek steady yields amid shaky commodity and
share markets.
Investment bankers predict that offerings of well-tested
government assets and cheap money will lure conservative-minded
long-term investors into deals, even as a sputtering Chinese
economy hits demand for Australia's natural resources.
Pension funds such as the Canadian Pension Plan Investment
Board CPPIBC.UL and sovereign wealth funds such as China
Investment Corp CIC.UL , the Abu Dhabi Investment Authority and
the Kuwait Investment Authority have already invested in
Australian assets and could be prominent players in the new
government sales.
"There's a massive amount of money looking for yield," said
Geoff Rasmussen, managing director of Azure Capital, which
helped telecom iiNet sell for $1.2 billion in 2015 and earned
the 10th highest mergers and acquisitions (M&A) advisory fees
for the year, Thomson Reuters data shows.
"Bank deposits and fixed income opportunities are so
low-margin that people have turned to infrastructure as an
alternative."
Australia's biggest deal of 2015 - and its biggest non-IPO
privatisation ever - was a $7.4 billion electricity network sold
by New South Wales state to a consortium two-thirds owned by
Middle East sovereign funds and a Canadian pension fund.
But that is likely to be eclipsed early in 2016 by a second
electricity network being sold by the same state. This second
asset was worth 20 percent more than the first asset, according
to a February 2015 sale briefing document seen by Reuters.
The New South Wales government and the pension and sovereign
funds did not immediately respond to emailed requests for
comment.
Neighbouring Victoria and Western Australia states are
selling some of the country's busiest ports, while the federal
government is expected to raise up to $4 billion for the
securities regulator's corporate registry business.
Last year also was a record year for inbound deals for
Australia, as North American investors, in particular, raised
their exposure.
Nick Sims, local head of M&A at Goldman Sachs (N:GS), which placed
third for advisory fees in 2015, said in an email that buyouts
originating from North America accounted for 21 percent of
inbound activity in 2015 compared to 8 percent the previous
year. Australian businesses offered a "pathway to Asia", Sims
said.
Companies which have relied on outsourcing by the mining
industry are, meanwhile, expected to explore takeover prospects
as a way to cut overheads, plug revenue gaps and improve their
survival chances as a two-decade minerals boom grinds to a halt.
Already some companies with mining industry exposure are
targets: rail freight giant Asciano AIO.AX is the object of a
$6.5 billion takeover battle between Canada's Brookfield Asset
Management BAMa.TO and local port operator Qube Holdings
QUB.AX .
Former mining services firm Broadspectrum BRS.AX is
fending off a cut-price offer from Spain's Ferrovial FER.MC as
it shifts its focus to government contracts.
"We'll likely see more activity across the resources space
but it will be more restructuring in nature than strategic M&A,"
said Aidan Allen, head of investment banking at Citi, which
ranked fourth for advisory fees in 2015 and is advising
Brookfield's Asciano offer.
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