New York-based private-equity (PE) firm CC Capital Partners tabled an offer for Australian asset manager Insignia Financial [ASX:IFL] just three days into 2025. The approach marks Australia’s first multi-billion dollar bid of the new year, valuing Insignia at AUD 2.9bn (USD 1.8bn), and stirring the market from its summer slumber.

The offer represents a 7.5% premium to a previously rejected proposal from Bain Capital and comes with familiar features: a sponsor-backed buyout, an Australian Stock Exchange (ASX)-listed target, and a foreign bidder. The move could ignite expectations that buyers are now more willing to cut deals, with increased activity and heightened competition set to follow.

Sandy Mak, Head of Corporate and a partner at Corrs Chambers Westgarth, says it is “not unusual” to see approaches in early January, if that is what makes sense for deal strategy. “A number of deals will have been percolating in the background even before Christmas, waiting for the right time to restart or make an approach,” she says, adding that she is optimistic about activity in the year ahead.

These appear reasonable expectations, with the past year already showing positive signs, as both deal volume and count exceeded those of 2023. According to Mergermarket data, Australia recorded 975 deals in total in 2024, up from 958 in 2023, while total deal volume jumped to USD 91.5bn, rising almost 30% from the previous year’s USD 71bn. Excluding the outlier post-pandemic year of 2021, 2024’s total deal volume was the highest since 2019.

Airtrunk the centre of attention

For the first time in 12 years, technology was the most active M&A sector Down Under in 2024, with total deal volume of USD 23.9bn from 193 transactions, according to Mergermarket. Much of this can be attributed to Blackstone’s USD 16bn swoop for data-centre business Airtrunk.

Mining was pushed into second place after topping sector charts for the past two years, but still registered 99 deals worth USD 17.1bn. The largest of these was Anglo American’s [LON:AAL] divestment of its steelmaking coal mines in Australia to Peabody Energy [NYSE:BTU] for nearly USD 3.8bn, followed by gold miner Northern Star Resources’ [ASX:NST] acquisition of De Grey Mining [ASX:DEG] for USD 3.2bn.

The data does not include Rio Tinto’s [ASX:RIO] USD 6.7bn takeover of Arcadium Lithium [NYSE:ALTM] [ASX:LTM], given the target is primarily listed in New York, or BHP’s [ASX:BHP] USD 2bn acquisition, jointly with Lundin Mining [TSE:LUN], of Canadian copper miner Filo Corp [TSX:FIL].

Financial sponsor deal volume surged in 2024, with buyouts and exits reaching USD 25.3bn and USD 18.9bn, respectively. However, if the Airtrunk deal is put aside, the lift is not as dramatic.

PE buyout activity did pick up, particularly in the second half, with eight deals worth at least AUD 1bn (USD 620m) each, compared with only two of that size in 1H24, per Mergermarket data. Notable buyouts agreed in December include Pacific Equity Partners’ acquisition of Singapore Post’s Australian business and SG Fleet, as well as Carlyle’s takeover of Waste Services Group from Livingbridge.

Wish you were here

There are a number of major PE-owned assets that did not trade in 2024, but are set to be carried over into 2025, including Permira-backed radiology business I-MED, TPG-supported Novotech, and childcare assets owned by Quadrant and Partners Group.

While it is hard to generalize, all these deals have potential price tags in excess of AUD 1bn (USD 620m), which could be relatively large for the Australian market, according to Mak. “This does narrow the pool of buyers, which makes competitive tension more difficult,” she says, adding that it is key to breach the divide on vendor and buyer price expectations during sale processes.

On a macro scale, major movements of decarbonization and digitization are propelling structural changes and will continue to drive capital deployment and transaction activity, according to Macquarie Capital.

From a financing perspective, Stewart Robertson, a partner at Corrs Chambers Westgarth dealing in acquisition finance, says that high levels of liquidity in debt markets across the spectrum of bank and non-bank lenders continue to support acquisitions in Australia. This is because many debt fund managers have a variety of funds, with differing fund mandates, which enables them to access alternative pools of capital for specific deals.

“We expect that support for unitranche and senior bank deals will continue to be strong in 2025,” explains Robertson. “In addition, we are seeing the re-emergence of TLB (Term Loan B) deals, adding further depth and liquidity to the debt markets supporting acquisition finance in Australia.”

It seems expectations for the new year are rising all the time.