29 June 2006 | by: Eric Johnston
The number of transactions rose and the value of merger activity leapt in the first half of the year, writes Eric Johnston.
The pace of merger and acquisition activity rebounded during the first half, positioning investment bankers for another boom year in lucrative advisory fees and personal bonuses.
With several multibillion-dollar deals announced in recent months - led by Alinta's ambitious $US12 billion-plus ($16.4 billion) bid for Australian Gas Light, followed by a $US4.8 billion Macquarie Bank-backed bid for UK transport firm Associated British Ports - the value of transactions is so far running at its highest in nearly six years.
The pace of M&A has intensified in the past two weeks with OneSteel making a friendly bid for Smorgon Steel and Babcock & Brown and Australian Pipeline Trust launching a joint bid for Victorian utility GasNet.
Jostling for pole position continues in the latest investment banking league table compiled by Bloomberg, but European giant UBS has again dominated in an advisory role.
According to the Bloomberg figures, there were 777 announced deals with Australian or New Zealand corporate involvement during the
June half, compared with 753 deals for the same time last year.The value of announced transactions was $US76.4 billion, up sharply from the $U549.8 billion in the same survey a year ago.
In total last year 1642 deals were announced in Australia and New Zealand, valued at a staggering $US1O7.9 billion.
"Companies are still cashed up and looking for opportunities," said Anthony Sweetman who heads M&A at UBS in Sydney.
"Although we've seen markets get a bit skittish in the past couple of weeks, you are still seeing people fairly confident on economic conditions going forward - which is more of a driver than where the actual market is." he said.
UBS was involved in 19 transactions during the half valued at $US18.3 billion.
It has advised AGL; Tabcorp in its $2.1 billion move on Queensland's Unitab; and the Sydney Futures Exchange in its merger with the Australian Stock Exchange. It is also acting for OneSteel.
Elsewhere in the closely watched M&A league tables, Macquarie Bank jumped two spots to take the No. 2 position, after securing work on 26 deals valued at $US20.4 billion.
While Macquane acted for Alinta in its initial move on AGL, the bulk of the bank's M&A activity is generated by deals on behalf of its of acquisition-hungry satellite funds, including Macquarie Infrastructure Group.
Jumping from six to three was Goldman Sachs JBWere, which continues to secure more M&A work following the Collins Street firm's merger with the Wall Street investment banking powerhouse.
Goldman Sacbs JBWere was involved in 12 transactions valued at $US12.4 billion, including advising US private equity firm Texas Pacific on its acquisition of retailer Myer.
"Unlike recent years, activity is across a wide range of sectors, from industrial to infrastructure to consumer, so we're finding it to be a broad-based, strong environment for M&A activity," its vice-chairman of investment banking, Alastair Lucas, said.
Citigroup felt the sharpest drop during the half, tumbling from second spot last year to eighth position, with involvement in six deals worth $US4.72 billion.
An overhaul of Rothschild under new executive chairman Trevor Rowe is showing results.
The appointment of several high-profile bankers, including Gareth Cope from Deutsche Bank and Colin Richardson from Citigroup, helped the firm secure several big-name resources and infrastructure mandates to jump to the No. 5 spot from 26 last year.
Making its debut in the league table top 10 was New Zealand-based boutique adviser Cameron Partners, which outpaced Australian boutiques Gresham Partners and Grant Samuel as well as global heavyweights ABN Amro and Credit Suisse.
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