Welcome to the 2019 edition of Bite Size Dealtracker Update which focuses on M&A and IPO activity in the Agribusiness, Food & Beverage industry in calendar year 2018.
Our previous Bite Size Dealtrackers covered the 7 year period from 1 January 2011 to 31 December 2017 (Long Term Period).
“Australia maintains it’s prominence in the global Agribusiness, Food & Beverage markets which we expect to continue due to significant interest from both Domestic and International Investors, the provenance of our produce in the export market and the overall value chains strong contribution to our GDP. The mid-market remains a strong force in this sector with 67% of total deals falling below $100m Enterprise Value.”
- Cameron Bacon, Corporate Finance Partner
Key insights for the Australian Agribusiness, Food & Beverage industry
Strong contribution to GDP
The provenance in Australian produce is a strong factor for the continued interest from Domestic and Global Investors, with Packaged Foods & Meats and Distillers & Vintners being the strongest sub-sector contributors. These Australian agricultural outputs continue to grow, accounting for 12% of our GDP.
Continued growth in the Agribusiness, Food & Beverage industry is expected as it continues to play a significant role in feeding the world’s ever-growing population. Future investment of additional capital from Investment Managers, ongoing M&A and the Public Markets will be crucial in supporting the continued growth of our domestic industry. Three clear ways government policy can support the Agribusiness, Food & Beverage sector to flourish, both here and overseas, are improved road, rail and port infrastructure, more affordable energy, and incentives for R&D.
Highly ranked M&A activity
In 2018, 700 M&A transactions occurred globally. Australia accounted for 4.6% of transactions and ranked 5th in global M&A deal activity behind the United States, United Kingdom, France and Spain. This is relatively consistent with the Long Term Period, where Australia is ranked 4th overall.
Small to mid-sized businesses remained predominant acquisition targets among both Domestic and International Investors. In calendar year 2018, 24% of Australian assets sold were purchased by international acquirers, mainly from Asia Pacific, United States and Canada. This speaks to the strength of the Australian brand and “Made in Australia” label in the Agribusiness, Food & Beverage industry – and should encourage businesses to consider alternate avenues of funding growth outside of the traditional debt structure.
Strong player in the IPO market
All 25 recorded IPOs in 2018 occurred in the Asia Pacific Region. 30% of the top 10 global IPOs originated from within Australia, demonstrating the strength of the Australian Agribusiness, Food & Beverage industry.
The proceeds of 4 Australian IPOs in 2018 were $49 million – of which 3 IPO transactions were included in the top 10 global IPOs by offer size.