queensland m&a - pitcher...5 99 72 85 5 $283m $4,042m $14,504m 137 70 90 6 $276m $4,540m $7,475m...
TRANSCRIPT
Queensland M&A Pedal to the metal
February 2018
Introduction 4
Sector summary 6
Sector cycles 7
Sector overviews Consumer 10
Technology, media & telecommunications 12
Leisure 14
Pharma, medical & biotech 16
Energy, mining & utilities 18
Geographic spread 20
IPO update 22
About Pitcher Partners 23
Contents
Disclaimer:This publication contains general information and is not intended to be comprehensive, nor to provide financial, investment, legal, tax or other professional advice or services. This document should not be acted on, or relied on or used as a basis for any investment or other decision or action that may affect you or your business. Any such reliance is solely at the users risk. Whilst we have no reason to believe that the information in this document is not reliable and accurate, this cannot be guaranteed. Pitcher Partners, its subsidiaries or affiliates thereof are not liable for any error, omission or inaccuracy contained herein, whether negligently caused or otherwise, or for any loss or damage howsoever suffered by any person or entity due to such an error, omission or inaccuracy.
44
$5.2bn $4.5bn $4.6bn $4.3bn
$9.1bn $12.4bn $1.0bn $14.5bn
200
220
240
260
280
300
2014 2015 2016 2017-
$2.0bn
$4.0bn
$6.0bn
$8.0bn
$10.0bn
$12.0bn
$14.0bn
$16.0bn
$18.0bn
$20.0bn
Below $250m $250m + Total
Pitcher Partners is pleased to present our Deal Pulse “Pedal to the metal” analysing Queensland Merger & Acquisitions (“M&A”) over the calendar year 2017. This report presents research findings including key transactions, and sector trends.
Deal Pulse focuses on M&A activity from a Queensland perspective, being: � Acquisitions by Queensland based private and public corporate entities of local, interstate and offshore
ventures; and � Divestments of Queensland based ventures to local, interstate and offshore entities and also private
equity funds. Transaction values are included in the report to the extent that deal values have been publicly disclosed.
Despite concerns a year ago that global forces may impact on the Queensland M&A market, for the fourth year running, deal numbers have continued to increase:
� Up another 7% to 303 deals (2016: 284 deals); � Up a cumulative 24% over the period (2014: 246 deals).
2017 also saw the return of the mega deals, including the $7.5bn long awaited Tabcorp/Tatts merger. We note the top four deals accounting for 71% ($13.4bn) of total $18.8bn in deal values (up 336% on 2016).
Deal volumes were driven primarily by: � Consumer - which surged to 55 deals, up from 29 in 2016. Whilst retail overall is seen to be struggling,
M&A in the automotive related sub-sectors including car dealerships, car related products and repairs accelerated to 17 deals. Also food product related transactions grew strongly.
� Pharma, medical & biotech - up 77% to 32 deals, including Quadrant PE’s $1bn sale of Icon Cancer Care. � Leisure and Technology, media and telecommunications (TMT) - both remained strong at 36 and 49 deals
respectively, demonstrating their status as mainstay sectors of the Queensland M&A landscape.
2014-17 Number of deals & total deal values
Introduction
246258
284
303
55
99
72
85
5
$283m
$4,042m
$14,504m
137
70
90
6
$276m
$4,540m
$7,475m
0 10 20 30 40 50 60 70 80 90 100 110 120 130
NotDisclosed
Small cap
Mid-market
Large cap
Number of deals
A key feature of this edition of Deal Pulse is our four year sector cycles analysis. Sectors and sub-sectors go through periods of high demand from acquirers (industry and private equity) and also low to no demand. Whilst some sectors grew strongly, 2017 saw the continued downward trend in the Business Services sector, and also sharp declines in deal volumes in Energy, Mining & Utilities and Real estate.
The outlook for 2018 remains strong with a spill over of deals from the end of 2017 closed/closing early in 2018. These factors, together with the combination of low interest rates and an appetite for growth, should see Queensland M&A’s upward trend continuing.
As a locally owned firm with national and international affiliations, Pitcher Partners is uniquely positioned to provide insight into the opportunity for mergers and acquisitions to unlock value for buyers and sellers.
We trust you find this report valuable.
Warwick FacePartner In Charge – Corporate [email protected]
2014-17 Queensland Market Breakdown
Deals 2017
Average Deals 2014-16
303 deals announced
Up 7% on 2016 (284 deals)
$18.8bn of disclosed deal value
Up 336% on 2016 ($5.6bn)
Largest deal:Tabcorp / Tatts
$7.5bn
Most active:National Storage
7 Acquisitions
66
Consumer
Deals 2016
29Deals 2017
55Value ($m)
635m(From 19 deals)
Value ($m)
1,059m(From 29 deals)
Pharma, medical & biotech
Deals 2016
18Deals 2017
32Value ($m)
459m(From 8 deals)
Value ($m)
1,719m(From 15 deals)
Financial services
Deals 2016
19Deals 2017
22Value ($m)
116m(From 5 deals)
Value ($m)
91m(From 11 deals)
Construction
Deals 2016
8Deals 2017
9Value ($m)
461m(From 6 deals)
Value ($m)
432m(From 5 deals)
Technology, media & telecommunications
Deals 2016
53Deals 2017
49Value ($m)
714m(From 29 deals)
Value ($m)
531m(From 27 deals)
Energy, mining & utilities
Deals 2016
41Deals 2017
27Value ($m)
563m(From 28 deals)
Value ($m)
4,538m(From 21 deals)
Business services
Deals 2016
25Deals 2017
20Value ($m)
510m(From 10 deals)
Value ($m)
276m(From 10 deals)
Transportation
Deals 2016
6Deals 2017
10Value ($m)
21m(From 2 deals)
Value ($m)
13m(From 2 deals)
Leisure
Deals 2016
35Deals 2017
36Value ($m)
1,103m(From 27 deals)
Value ($m)
9,342m(From 23 deals)
Industrials & chemicals
Deals 2016
18Deals 2017
22Value ($m)
47m(From 6 deals)
Value ($m)
85m(From 6 deals)
Real estate
Deals 2016
26Deals 2017
14Value ($m)
661m(From 23 deals)
Value ($m)
586m(From 13 deals)
Agriculture
Deals 2016
6Deals 2017
7Value ($m)
286m(From 4 deals)
Value ($m)
158m(From 4 deals)
Sector summary
77
PE interest in medical services businesses has been key over the last four years driving investments in, bolt on acquisitions to, and exits of Cura Day Hospitals, ICON Cancer Care and HPS. Whilst aged care and dental acquisitions have featured in some years, 2017 saw these again become a focus, together with more PE interest through investments in radiology (QScan), primary health (Hills Medical), and also the re-emergence of Biotechnology investments.
Pharma, medical &
biotech
Figure 1: M&A deal volume 2014-17
Sector cycles
2724
29
55
20
11
18
32
1715
1922
10
15
20
25
30
35
40
45
50
55
The three dominant sub-sectors across 2014-16 were coffee/fast food, veterinary practices and also automotive retail. Consumer really accelerated in 2017 through growth across all these sub-sectors (particularly those car/auto related). Strong hunger for food, and food product businesses, saw acquisitions such as Weis Frozen Foods, Peanut Company of Australia, and Sunfresh Salads. These sub-sectors propelled consumer to 55 deals (more than double the previous 3 year average).
Consumer
Financial services, not a traditionally strong Queensland sector, has been on a steady growth trajectory over the past four years. Main acquisition sub-sectors driving growth were particularly insurance brokering, and financial advisory/wealth management as industry players seek scale. 2017 also saw the re-emergence of banking deals, with the proposed acquisition by Firstmac of WA regional bank Goldfields Money.
Financial services
Trending
up
88
28
37
53
49
23 24
35 36
22
26
18
22
10
15
20
25
30
35
40
45
50
55
Leisure
Sector cyclesFigure 2: M&A deal volume 2014-17
Industrials & chemicals
TMT
Industrials & chemicals have traditionally provided a solid deal base, but within this broad segment a mixture of deals including building products (divestments by GWA), hire businesses like Skyreach, and various products businesses. 2017 saw activity in waste management including the sale of a component of JJ Richards to Tox Free, a number of acquisitions by graphics supply business Orafol, and also a $33m forklift hire deal with the sale of North Fork to Japan’s Nishio (the buyer of Skyreach).
The period 2014 to 2016 saw online deals such as Wotif and Onthehouse, telco transactions such as Vaya and BigAir, and media deals such as APN Newspapers. Software deals have however been a key driver of deal volumes, such that 2016 saw businesses head “To the cloud” as the sector deals hit a record 53 deals. 2017’s deal volume of 49 again highlighted the strength of Qld technology with key acquisitions including Genie Solutions, Mineware and Resources Connect.
Over the last four years Qld’s leisure related transactions have been underpinned by two main sub-sectors; hotels and resorts deals, and travel businesses acquisitions (mainly by CTM and Flight Centre). Over the last 24 months however, deals in the gym and also caravan related sectors have seen leisure consistently in Qld’s top three sectors. 2017 saw Mantra announce a sale to Accor, Apollo Leisure ramp up its acquisition strategy, and Flight Centre also executed four more acquisitions.
Strong &
steady
99
32
3841
27
16
2326
14
35
44
25
20
10
15
20
25
30
35
40
45
50
55
Figure 3: M&A deal volume 2014-17
Energy, mining & utilities
EM&U traditionally a staple sector of Qld M&A fell sharply during 2017. Recent years have seen deals arising from the LNG investments (QCLNG), a raft of mining consolidation deals as investors sought a way of some return from the struggling underlying sector dynamics, and the emergence of renewables transactions. Whilst coal mining deals such as Coal & Allied dominated 2017, deals were also done in renewables, and the diversified minerals and gold sectors.
Business services was Qld’s leading deal sector across 2014 and 2015, fuelled by three main sub-sectors - childcare, RTOs and legal firms. 2016 saw it slip to the sixth largest, as the RTO sector imploded, and the childcare aggregators G8 and Affinity decelerated their acquisition strategies. 2017 saw the sector continue to fall, and although childcare deals continued, legal firms and RTO/training deals were minimal, labour hire transactions beginning to emerge.
Business ServicesBusiness
services
Real estate deals over recent years have been consistently propped up by two serial acquirers, National Storage and aged rental accommodation provider Eureka Group (accounting for over 50% of deals). In 2017, whilst National Storage has continued to acquire, Eureka Group Holdings who had averaged several deals a year failed to make an acquisition. Real estate had one notable deal during the year being Oak Tree Retirement Villages sale to First State Super.
Real EstateReal
estate
Trending
down
1010
Consumer01Car and automotive related deals drove Consumer to Qld M&A’s chequered flagDespite mid-year profit downgrades announced by both Qld’s AP Eagers and WA based Automotive Holdings Group (off the back of a regulator crackdown on car finance premiums and a general slowdown in sales), the car retail sub-sector M&A accelerated:
� MotorCycle Holdings (which IPO’ed during 2016) drove its growth with the acquisitions of: – Cassons $126m – seeing the vendor principals of Cassons, Rob and John Cassen, joining
executive team and also the company’s board;
– Trinder Avenue Motors; and – Evolution Motorcycles and Action Motorcycles on the Gold Coast.
� AP Eagers – acquired The Porsche Centre Adelaide for $14m. � Auto Pact (backed by Archer Capital) acquired Queensland’s Bayford Group, and entered Victoria
acquiring Peter Terry Group ahead of its possible IPO.
� NSW based Peter Warren Motors acquired James Frizelle’s Automotive Group for $150m. Also in the automotive space, in addition to launching its December $131m IPO, National Tyre and Wheel executed three acquisitions including MPC Mags and Tyres $14m, SA based Cotton Tyre Services $6.2m and 50% of South African Cooper Tire’s import and wholesaler Top Draw Tyres for $4m.
$770
$2,452
$635
$1,059
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
0
10
20
30
40
50
60
2014 2015 2016 2017
Deal Value ($m
)Dea
l vol
ume
2924
55
27
Figure 4: Consumer deal volume and value 2014-17
1111
Food and food product deals were also the flavour of the 2017 year including: � Unilever’s acquisition of Weis Frozen Foods; � NSW based Bega Cheese’s $35m acquisition of the Peanut Company of Australia; � Blue Sky Private Equity’s $18m investment in SA based Sunfresh Salads; and � Priestley’s acquisition of NZ based Elite Food Group.
The hunger for M&A within Australia’s fast food industry also continued, including: � Collins Food Group - continued its roll up of KFC franchises acquiring 16 more in the Netherlands
for $88.0m in May, and a further 28 from Yum! Brands, for $110m in June.
� Dominos – acquired the balance of Dominos Japan for $42m. � Betty’s Burgers – sold out to the Retail Zoo for $20m.
National Vet Care also continued its acquisition model acquiring 17 clinics in 8 separate transactions.
Rounding out Consumer was Billabong’s $384m cash sale to US based Boardriders, (operators of Quicksilver), which remains subject to due diligence, financing and shareholder/regulatory approvals.
8
7
11
1
$66m
$609m
$384m
26
16
12
1
$24m
$641m
$620m
0 5 10 15 20 25
NotDisclosed
Small cap
Mid-market
Large cap
Number of deals
Figure 5: Consumer deal volume and value breakdown
Deals 2017
Average Deals 2014-16
Deals 2017
Average Deals 2014-16
It’s a product that has an installed demand element to it. There’s 22 million vehicles in Australia, they’re all running on tyres — they all need changing.
Peter Ludemann // Managing Director // National Tyre & Wheel
Deals 2016
29Deals 2017
55Value ($m)
635m(From 19 deals)
Value ($m)
1,059m(From 29 deals)
Avg. Value ($m)*
33m* Deals above $500m excluded
Avg. Value ($m)*
37m
1212
$970
$207
$714
$531
$0
$200
$400
$600
$800
$1,000
$1,200
0
10
20
30
40
50
60
2014 2015 2016 2017
Deal Value ($m
)Dea
l vol
ume
49
Figure 6: Technology, media & telecommunications deal volume and values 2014-17
53
28
37
Queensland’s rich history of software services businesses continuesWhilst 2017 saw blockchain dominate conversations, the bulk of M&A within TMT (28 deals) revolved around the acquisition of monitoring and performance optimisation software. Interestingly, these software acquisitions, were in certain instances contrary to broader M&A trends within the industry verticals they serviced.
Mining support businesses (contrary to EM&U deals) continued to search for the technology edge with: � RungepincockMinarco acquiring iSolutions ($21m), MinVu ($4m) and MineOptima; and � Mineware being acquired by Komatsu.
Consistent with general M&A trends within Pharma, medical and biotech, 2017 saw: � Genie Solutions - the leading medical practice and clinical software platform acquired by Industry
Funds Management for $52m; and � CharmHealth - specialist hospital electronic medical record/clinical information systems was
acquired by The Citadel Group for $8m.
Resources management and payroll related software saw: � Resources Connect - workforce management provider sell to SmartTrans Holdings for $17m; � Sky Payroll - divest to newly listed Elmo Software for $2m; and � Digital Instinct - casinos and resort focused workforce management provider sell out to Kronos.
Technology, media & telecommunications02
13
19
10
9
1
$74m
$457m
22
17
10
$39m
$294m
$296m
0 5 10 15 20 25
NotDisclosed
Small cap
Mid-market
Large cap
Number of deals
13
The largest disclosed deal in software was the acquisition of Brisbane based slot machine gaming software specialist provider Eyecon for $81m by UK based Playtech PLC.
The telecommunication carrier market saw deals from: � Superloop - acquiring G2 ($12m), NuSkope ($10m) and SubPartners ($3m) � Overthewire - acquiring Sydney based VPN Solutions for $17m.
In the media/ecommerce sub-sector, embattled surfwear retailer SurfStitch continued its downward trajectory, selling three of its businesses Magicseaweed, Rolling Youth (Stab Magazine) and Surfdome Shop, for deep discounts (Surfdome $12m versus $45m outlaid) to prices paid over the last few years.
Rounding out the larger deals of the sector was Crescent Capital’s divestment of mining technology company Groundprobe to Orica Limited for $205m. Groundprobe was formed in 2001 as a spin off from the University of Queensland, and was acquired by Crescent in 2010.
Deals 2017
Average Deals 2014-16
Figure 7: Technology, media & telecommunications deal volume and value breakdown
Deals 2016
53Deals 2017
49 Value ($m)
714m(From 29 deals)
Value ($m)
531m(From 27 deals)
Avg. Value ($m)*
25m* Deals above $500m excluded
Avg. Value ($m)*
20m
We are proud to bring into our portfolio an outstanding business
that has delivered high quality technology products and services to specialist and general medical practices in Australia.
Steven Lipchin // Head of Private Equity // IFM Investors
1414
$573 $794 $1,103
$9,342
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
0
10
20
30
40
50
60
2014 2015 2016 2017
Deal Value ($m
)Dea
l vol
ume 35
23
36
Figure 8: Leisure deal volumes and disclosed values 2014-17
24
Leisure03Whilst the mega Tabcorp/Tatts deal drove Leisure values, hotel and resort deals dominated the sectorAfter more than a year, the merger of gambling giants Tabcorp and Tatts was finalised. This deal worth over $7.5bn created a company (now based in Victoria) controlling more than 90% of Australia’s totalisator betting, generating annual revenues in excess of $5.0bn.
The main Leisure story of 2017 saw hotel and resorts deliver 16 of the 36 deals. Key transactions involved the Gold Coast based Mantra Group who:
� Acquired the Art Series Hotel Group for $53m; and then � Entered into a binding agreement with AccorHotels worth $1.3bn. The deal is still subject to
regulatory approval but has been unanimously recommended by the Mantra board.
Caravan and leisure parks were also in the M&A spotlight with deals including Cairns Coconut Holiday Resort, and Woodgate Beach Holiday Park.
1515
Continuing the caravanning theme, Brisbane based recreational vehicle group Apollo Tourism & Leisure (which IPO’ed in 2016) completed four acquisitions including:
� Canada’s largest RV rental and sales company, (TSX listed) CanaDream for $17m. � Kratzmanns, an Australian retailer of new and used caravans and motorhomes for $16m; � Sydney RV (another retailer) for $2m; and � George Day Caravans and Motorhomes for $9m.
Serial acquirer Flight Centre rounded out the Leisure sector with four more acquisitions in 2017 being New World Travel, Travel Managers Group/Executive Travel Limited, Olympus Tours/Bespoke Hospitality Management Asia, and Vietnam-based inbound tour operator Buffalo Tours.
Since listing in 2016, we have identified and executed opportunities to support our growth plans and these investments will make important contributions to Apollo’s business.
Deals 2016
35Deals 2017
36Value ($m)
1,103m(From 27 deals)
Value ($m)
9,342m(From 23 deals)
Avg. Value ($m)*
41m* Deals above $500m excluded
Avg. Value ($m)*
25mLuke Trouchet // Managing Director & CEO // Apollo Tourism
Figure 9: Leisure deal volume and value breakdown
Deals 2017
Average Deals 2014-16
6
6
15
$14m
$457m
$8,871m
13
5
16
2
$32m
$791m
0 5 10 15 20 25
NotDisclosed
Small cap
Mid-market
Large cap
Number of deals
Deals 2017
Average Deals 2014-16
1616
Figure 10: Pharma, medical & biotech deal volume and values 2014-17
Pharma, medical & biotech04
$966 $175 $459
$1,719
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
0
10
20
30
40
50
60
2014 2015 2016 2017
Deal Value ($m
)Dea
l vol
ume
Demand for Australian medical services in Asia drives sector M&A to a four year high M&A in the historically subdued Pharma, medical & biotech sector surged in 2017, with deal numbers almost doubling to close out 2017 with 32 announced deals.
Queensland quite proudly has been the birthplace of a number of quality medical services businesses, and during 2017 a number of landmark deals occurred, including:
� Icon Cancer Care – Australia’s leading private cancer and oncology services group, was sold by Quadrant PE to a consortium led by Queensland Investment Corporation (QIC) for $1.0bn (also including Goldman Sachs PE and China’s Pagoda Investment). Icon has a strong focus on the Asian market, where a forecast 70 per cent increase in cancer rates over the next decade is expected to drive growth along with the prestige associated with Australian medical services.
� QScan Services and North Coast Radiology Group – shortly before off-loading Icon, Quadrant acquired a 55% stake to fund expansion of the business (at a $200m valuation) which offers specialist services such as digital X-ray, ultrasound, CT and PET scans as well as MRIs and nuclear medicine into China, leveraging off the experience gained managing Icon. Qscan already has 13 new sites in the pipeline and the combined Qscan and NCR businesses will together run 33 clinics, boasting 40 radiologists and 420 staff, providing services to over 500,000 patients.
20
1118
32
1717
Figure 11: Pharma, medical & biotech deal volume and value breakdown
Radiology or imaging is an area that is most transferable. I personally think many imaging groups here
don’t have a focus on Asia. It’s a bit of an open door, if you put in the resources and you look to partner with the right people, there is opportunity.
Deals 2016
18Deals 2017
32Value ($m)
459m(From 8 deals)
Value ($m)
1,719m(From 15 deals)
Avg. Value ($m)*
57m* Deals above $500m excluded
Avg. Value ($m)*
51mMarcus Darville // Managing Partner Quadrant Private Equity
Deals 2017
Average Deals 2014-16
7
4
5
1
$10m
$709m
$1,000m
17
2
12
1
$16m
$312m
$206m
0 5 10 15 20 25
NotDisclosed
Small cap
Mid-market
Large cap
Number of deals
� Cura Day Hospitals – operator of day hospital facilities in Australia was on-sold to Germany based Fresenius Medical Care AG & Co. by Intermediate Capital PLC who purchased the business from The Growth Fund in 2014.
In the dental sub-sector, ASX listed dental aggregator 1300 Smiles has made four additional acquisitions in 2017 acquiring six additional surgeries, and various other players continue to seek investment in the sector.
Medical practice acquisitions continued including Smartclinics rollup strategy and BlueSky Private Equity’s investment in Hills Medical, where they took a 62% stake.
The aged care sub-sector also saw two not able transactions: � Infinite Aged Care – acquired by Moelis for $45m from Next Capital; and � Durack Gardens – acquired by ASX listed Ingenia Communities Group for $25m.
Deals 2017
Average Deals 2014-16
1818
$832
$11,044
$563
$4,538
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
0
10
20
30
40
50
60
2014 2015 2016 2017
Deal Value ($m
)Dea
l vol
ume
Energy, mining & utilities05
Queensland EM&U deals fall materially in 2017 by number despite sector “green shoots” Energy, mining & utilities deal volumes dropped 32% in 2017, with 27 deals announced as compared to 41 in 2016. The sector outlook is however generally viewed as positive with Australia’s resources and energy export earnings growing rapidly in 2017, up 25% to $205 billion. This increase was primarily driven by demand for metallurgical coal and iron ore commodities, which make up over half of Australia’s resource and energy exports as China continues its consumption of steel making commodities.
Coal mining transactions dominated value in the sector including: � Coal & Allied Industries – sold for $3.5bn by Rio Tinto to Chinese backed Yancoal after an extensive
bidding war. The deal, whilst positive for Rio, is said to have been complicated by Rio’s shareholder structure, with Chalco (Rio’s largest shareholder) and Yancoal both ultimately owned by the Chinese Government. This ownership is now seen to likely result in a re-direction of output away from the traditional customers in Korea and Japan.
� The second largest deal in the sector was Wesfarmer’s $700m sale of its Curragh coal mine to Coronado Coal LLC (part of privately owned Texas based, The Energy & Minerals Group).
Figure 12: Energy, mining & utilities deal volume and values 2014-17
38 41
3227
1919
Recent years have seen the emergence of renewables transactions, and 2017 saw Brisbane based listed ReNu Energy execute a number of Solar PV acquisitions including gaining control of VivoPower (600kW Amaroo Project), a Portfolio of Five Projects, and a 800kW Project in NSW.
Various transactions also arose across the diversified minerals and gold sectors including: � CopperChem – acquisition from Independence Group NL of the Stockman Cu-Zn Project comprises
copper-zinc-lead-silver-gold deposits for $47m.
� Hellyer Gold Mines – divestment of Gold Mine assets that include a large mill facility and full supporting infrastructure to NQ Minerals Plc for $25m.
Outside of the M&A space, Adani continues to indicate it will press ahead with its contentious $16.5bn Carmichael coal mine in North Queensland. Despite multiple setbacks including a number of court challenges and questions about the financing of the project, Adani has opened its regional office in Townsville.
Figure 13: Energy, mining & utilities deal volume and value breakdown
Energy, mining & utilities
Deals 2016
41Deals 2017
27Value ($m)
563m(From 28 deals)
Value ($m)
4,538m(From 21 deals)
Avg. Value ($m)*
20m* Deals above $500m excluded
Avg. Value ($m)*
25m
I think there’s a distinct possibility that the output from these mines
could be diverted to China... Yancoal is still a listed company here in Australia, and it has an obligation to its shareholders to extract maximum rent for any product it sells.
Glyn Lawcock // Global Head of Mining Equity // UBS
Deals 2017
Average Deals 2014-16
11
13
11
2
$44m
$245m
$4,249m
6
12
7
2
$42m
$514m
$3,590m
0 5 10 15 20 25
NotDisclosed
Small cap
Mid-market
Large cap
Number of deals
Deals 2017
Average Deals 2014-16
2020
QBiotics Group acquired Ecobiotics for $130m.
Corondo Coal LLC acquired
Wesfarmers Curragh Pty Ltd for $700m
Deals involved both the buyer and seller being Queensland companies.
Quadrant Private Equity sold Icon
Cancer Care to a consortium led by Queensland Investment Corporation (QIC)
for $1.0bn.
(2016: 67 deals)53
Tatts Group acquired Tabcorp Holdings for $7.6bn.95Deals where the seller was
from Queensland and the buyer was from another Australian state.
(2016: 87 deals)
Geographic spread
Sell side transactions
For the fourth year running, interstate buyers led the acquisition of Queensland businesses with 95 deals, comprising 46% of sell side deals (2016: 87 deals, 42%). Interstate deals also accounted for 73% ($13.7bn) of announced deal values in 2017.
The number of international buyers also increased on 2017, with 50 Queensland businesses transitioning to overseas ownership (43 in 2016).
Queensland to Queensland deals fell, with only 53 deals staying within Queensland borders (67 in 2016). Queensland deals also accounted for only 3% of announced deal values ($640m).
Private equity investment continued, with ten Queensland acquisitions (nine in 2016) totalling $1.4bn ($964m in 2016). Private equity was also responsible for the fourth largest deal of 2017, which saw Quadrant Private Equity sell oncology specialist Icon Cancer Care to a consortium led by Queensland Investment Corporation (QIC) for $1.0bn.
Deals where the seller was from Queensland and there was an international buyer. 50
(2016: 43 deals)
Deals where the seller was from Queensland and the buyer was a private equity fund.
(2016: 9 deals)10
Queensland continues to be a net seller, whilst international deals increased further with 50 businesses selling out to overseas buyers.
2121
Collins Food Group acquired
16 KFC restaurants located in the Netherlands from Yum! Brands, Inc for $88m.
53Deals involved both the buyer and seller being Queensland companies.
69Deals where the buyer was from Queensland and the seller was from another Australian state.
Buy side transactions
The 2017 year saw Queensland businesses expand interstate, with these deals increasing 23% from 56 to 69 deals. National Storage was again active on the buy side, with four of its seven acquisitions coming from other Australian states.
Other acquirers of note were National Veterinary Care who acquired 17 veterinary clinics in eight transactions and newly listed National Tyre & Wheel, who made three acquisitions ahead of their December admission to the ASX.
Offshore acquisitions by Queensland companies increased slightly in 2017 with 26 deals. Flight Centre remained active internationally, with two acquisitions, whilst Queensland based Collins Food Group continued its KFC roll up, both internationally and domestically.
26Deals where the buyer was from Queensland and there was an international seller.
(2016: 22 deals)
(2016: 67 deals)
(2016: 56 deals)
Acciona Infrastructure Australia acquired Geotech
Holdings for $197m.
QBiotics Group acquired Ecobiotics for $130m.
Geographic transactions (net)
45 38 43 50
(19) (29) (22) (26)
269
21 24
(70)
(50)
(30)
(10)
10
30
50
70
90
2014 2015 2016 2017
Sell Buy Net
International transactions
68 7087 95
(63) (47)
(56) (69)
523 31 26
(70)
(50)
(30)
(10)
10
30
50
70
90
2014 2015 2016 2017
Sell Buy Net
National transactions
2222
Largest & smallest listing by offer / market cap (as at 29 Dec 2017)
Largest listing Wagners Holding Company
Offer size ($m) $196.8
Market capitalisation $437.3
Smallest listing Lithium Consolidated Mineral Exploration
Offer size ($m) $5.3
Market capitalisation $18.0
Highest / lowest return since listing (as at 29 Dec 2017)
Highest investor return Mayur Resource Group
Subscription price $0.40
% Change to date 158%
Lowest investor return Velocity Property Group
Subscription price $0.20
% Change to date (62%)
IPOs by Industry 15yr Avg 2017
Energy, mining & utilities 5 3
Financial services 1 2
TMT 1 2
Consumer 1 1
Real estate 1 1
Pharma, medical & biotech 1 0
Industrials & chemicals 0 0
Agriculture 0 0
Business services 0 0
Construction 0 0
Leisure 0 0
Transportation 0 0
Total 10 9
In 2017, a total of nine Queensland companies listed on the Australian Securities Exchange (ASX), raising a total of $356m. This is in line with the previous four years which also saw nine IPOs in Queensland, whilst the 15 year average is 10 Queensland listings per year. Capital raised was lower than the $504m in 2016, but consistent with the average of $353m raised per year since the global financial crisis (15yr average is $500m).Post IPO trading varied widely for the newly listed, but six out of the nine companies closed above issue price by year end. The largest listing by both capital raised and market capitalisation was Wagners (WGN), which operates in the construction materials and mining services sector. The offer size of $197m represented an implied market capitalisation of $437m, finishing the year up 39%.
Pitcher Partners acted as Investigating Accountants on two IPOs:
� Qld’s second largest, National Tyre & Wheel Limited (NTD), the Brisbane based tyre wholesale marketer and distributor which raised $59m, and finished the year up 24%; and
� Qld’s most successful, Mayur Resources which raised $13m, and was up 158% by year end.
Figure 14: Number of IPO transactions from 2013-17
IPO update
6
3 2
4 4
3
6 7
5 5
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
-
2
4
6
8
10
12
2013 2014 2015 2016 2017
All OrdsTotal Listings
2nd Half
1st Half
15yr averagelistings
All Ordinaries
2323
Pitcher Partners is a full service accounting and business advisory firm with a strong reputation for providing quality advice to privately-owned, corporate and public organisations.In Australia, Pitcher Partners has firms in Brisbane, Adelaide, Melbourne, Perth, Sydney and Newcastle. We collaboratively leverage from each other’s networks and draw on the skills and expertise of 1,280+ staff, in order to service our clients.
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About Pitcher Partners
Warwick Face+61 7 3222 8302
Ross Walker+61 7 3222 8406
James Baker+61 7 3222 8482
Kieran Wallis+61 7 3222 8383
Pitcher Partners Corporate Finance Senior Team:
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