Queensland M&A Pedal to the metal - February 2018 - Pitcher Partners
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Queensland M&A
Pedal to the metal
February 2018
Contents Introduction 4 Sector summary 6 Sector cycles 7 Sector overviews Consumer10 Technology, media & telecommunications 12 Leisure14 Pharma, medical & biotech 16 Energy, mining & utilities 18 Geographic spread 20 IPO update 22 About Pitcher Partners 23
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.
Introduction
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
303
$20.0bn
300 $18.0bn
284
$16.0bn
280
$14.0bn
258
$12.0bn
260 246
$10.0bn
$8.0bn
240
$9.1bn $12.4bn $1.0bn $14.5bn $6.0bn
220 $4.0bn
$2.0bn
$5.2bn $4.5bn $4.6bn $4.3bn
200 -
2014 2015 2016 2017
Below $250m $250m + Total
4
303 deals $18.8bn of
announced disclosed deal value
Largest deal: Most active:
Tabcorp / Tatts National Storage
Up 7% on
2016 (284 deals)
Up 336% on
2016 ($5.6bn)
$7.5bn 7 Acquisitions
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 Face
Partner In Charge – Corporate Finance
wface@pitcherpartners.com.au
2014-17 Queensland Market Breakdown
6 $14,504m Deals 2017
Large cap
Average Deals 2014-16
5 $7,475m
90 $4,042m
Mid-market
85 $4,540m
70 $283m
Small cap
72 $276m
Not 137
Disclosed 99
0 10 20 30 40 50 60 70 80 90 100 110 120 130
Number of deals
5
Sector summary
Consumer Technology, media & Leisure
telecommunications
29 55 53 49 35 36
Deals 2016 Deals 2017 Deals 2016 Deals 2017 Deals 2016 Deals 2017
Value ($m) Value ($m) Value ($m) Value ($m) Value ($m) Value ($m)
635m 1,059m 714m 531m 1,103m 9,342m
(From 19 deals) (From 29 deals) (From 29 deals) (From 27 deals) (From 27 deals) (From 23 deals)
Pharma, medical & biotech Energy, mining & utilities Industrials & chemicals
18 32 41 27 18 22
Deals 2016 Deals 2017 Deals 2016 Deals 2017 Deals 2016 Deals 2017
Value ($m) Value ($m) Value ($m) Value ($m) Value ($m) Value ($m)
459m 1,719m 563m 4,538m 47m 85m
(From 8 deals) (From 15 deals) (From 28 deals) (From 21 deals) (From 6 deals) (From 6 deals)
Financial services Business services Real estate
19 22 25 20 26 14
Deals 2016 Deals 2017 Deals 2016 Deals 2017 Deals 2016 Deals 2017
Value ($m) Value ($m) Value ($m) Value ($m) Value ($m) Value ($m)
116m 91m 510m 276m 661m 586m
(From 5 deals) (From 11 deals) (From 10 deals) (From 10 deals) (From 23 deals) (From 13 deals)
Construction Transportation Agriculture
8 9 6 10 6 7
Deals 2016 Deals 2017 Deals 2016 Deals 2017 Deals 2016 Deals 2017
Value ($m) Value ($m) Value ($m) Value ($m) Value ($m) Value ($m)
461m 432m 21m 13m 286m 158m
(From 6 deals) (From 5 deals) (From 2 deals) (From 2 deals) (From 4 deals) (From 4 deals)
6
Sector cycles
Figure 1: M&A deal volume 2014-17
Trending 55
50
45
55
40
35
32
30
29
27
25
24
up
22
20 20 19
17 18
15 15
10 11
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
Consumer 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).
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,
Pharma, 2017 saw these again become a focus, together with more PE interest
medical & through investments in radiology (QScan), primary health (Hills
biotech Medical), and also the re-emergence of Biotechnology investments.
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.
Financial 2017 also saw the re-emergence of banking deals, with the proposed
services acquisition by Firstmac of WA regional bank Goldfields Money.
7
Sector cycles
Figure 2: M&A deal volume 2014-17
Strong & 55
50
45
53
49
40
37 36
35 35
30
28
25 26
23 24
22 22
20
18
steady
15
10
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.
TMT 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.
Leisure 2017 saw Mantra announce a sale to Accor, Apollo Leisure ramp up
its acquisition strategy, and Flight Centre also executed four more
acquisitions.
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
Industrials component of JJ Richards to Tox Free, a number of acquisitions by
& chemicals 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).
8
Figure 3: M&A deal volume 2014-17
Trending 55
50
45 44
40 41
38
35 35
32
30
26 27
25 25
23
20
down
20
15 16 14
10
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.
Energy, mining Whilst coal mining deals such as Coal & Allied dominated 2017, deals
were also done in renewables, and the diversified minerals and gold
& utilities 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.
Business
Business 2017 saw the sector continue to fall, and although childcare deals
Services
services continued, legal firms and RTO/training deals were minimal, labour
hire transactions beginning to emerge.
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
Real
Real
Estate Group Holdings who had averaged several deals a year failed to make
estate an acquisition. Real estate had one notable deal during the year being
Oak Tree Retirement Villages sale to First State Super.
9
01 Consumer
Car and automotive related deals drove
Consumer to Qld M&A’s chequered flag
Despite 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.
Figure 4: Consumer deal volume and value 2014-17
55
60 $3,000
50 $2,500
$2,452
Deal Value ($m)
40 $2,000
Deal volume
27 29
30 24 $1,500
20 $1,000
$1,059
10 $770 $500
$635
0 $0
2014 2015 2016 2017
10
1029 55
Deals 2016 Deals 2017
It’s a product that has an installed
demand element to it. There’s 22 million
vehicles in Australia, they’re all running on Value ($m) Value ($m)
tyres — they all need changing. 635m 1,059m
(From 19 deals) (From 29 deals)
Avg. Value ($m)* Avg. Value ($m)*
Peter Ludemann // Managing Director
// National Tyre & Wheel 33m
* Deals above $500m excluded
37m
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.
Figure 5: Consumer deal volume and value breakdown
Deals 2017
1 $384m
Large cap Average Deals 2014-16
1 $620m
Mid- 12 $609m
market 11 $641m
16 $66m
Small cap
7 $24m
Not 26
Disclosed 8
0 5 10 15 20 25
Number of deals
11
1102 Technology, media &
telecommunications
Queensland’s rich history of software services
businesses continues
Whilst 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.
Figure 6: Technology, media & telecommunications deal volume and values 2014-17
60 53 $1,200
49
50 $1,000
$970 37
Deal Value ($m)
40 $800
Deal volume
28
30 $714 $600
$531
20 $400
10 $200
$207
0 $0
2014 2015 2016 2017
12
12We are proud to bring into our
53 49
Deals 2016 Deals 2017
portfolio an outstanding business
that has delivered high quality technology
products and services to specialist and Value ($m) Value ($m)
general medical practices in Australia. 714m 531m
(From 29 deals) (From 27 deals)
Avg. Value ($m)* Avg. Value ($m)*
Steven Lipchin // Head of Private Equity // IFM Investors 25m
* Deals above $500m excluded
20m
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.
Figure 7: Technology, media & telecommunications deal volume and value breakdown
Deals 2017
Average Deals 2014-16
Large cap
1 $296m
Mid- 10 $457m
market 9 $294m
17 $74m
Small cap
10 $39m
Not 22
Disclosed 19
0 5 10 15 20 25
Number of deals
13
1303 Leisure
Whilst the mega Tabcorp/Tatts deal drove
Leisure values, hotel and resort deals dominated
the sector
After 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.
Figure 8: Leisure deal volumes and disclosed values 2014-17
60 $9,342 $10,000
$9,000
50
$8,000
36
Deal Value ($m)
40
35 $7,000
Deal volume
$6,000
30 23 24 $5,000
$4,000
20
$3,000
$1,103 $2,000
10 $794
$573 $1,000
0 $0
2014 2015 2016 2017
14
1435 36
Deals 2016 Deals 2017
Since listing in 2016, we have
identified and executed opportunities
to support our growth plans and these Value ($m) Value ($m)
investments will make important 1,103m 9,342m
(From 27 deals) (From 23 deals)
contributions to Apollo’s business. Avg. Value ($m)* Avg. Value ($m)*
Luke Trouchet // Managing Director & CEO // Apollo Tourism 41m 25m
* Deals above $500m excluded
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.
Figure 9: Leisure deal volume and value breakdown
2 $8,871m Deals 2017
Large cap Average Deals 2014-16
Mid- 16 $457m
market 15 $791m
5 $14m
Small cap
6 $32m
Not 13
Disclosed 6
0 5 10 15 20 25
Number of deals
15
1504 Pharma, medical &
biotech
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.
Figure 10: Pharma, medical & biotech deal volume and values 2014-17
60 $2,000
$1,800
50
$1,719 $1,600
Deal Value ($m)
$1,400
40 32
Deal volume
$1,200
30 $1,000
20 18 $800
20 11 $600
$400
10
$200
$966 $175 $459
0 $0
2014 2015 2016 2017
16
16Radiology or imaging is an area that
18 32
is most transferable. I personally
Deals 2016 Deals 2017
think many imaging groups here
don’t have a focus on Asia. It’s a bit of an
open door, if you put in the resources and Value ($m) Value ($m)
you look to partner with the right people, 459m 1,719m
there is opportunity.
(From 8 deals) (From 15 deals)
Avg. Value ($m)* Avg. Value ($m)*
Marcus Darville // Managing Partner
Quadrant Private Equity 57m 51m
* Deals above $500m excluded
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.
Figure 11: Pharma, medical & biotech deal volume and value breakdown
1 $1,000m Deals 2017
Large cap Average Deals 2014-16
1 $206m
Mid- 12 $709m
market 5 $312m
2 $10m
Small cap
4 $16m
Not 17
Disclosed 7
0 5 10 15 20 25
Number of deals
17
1705 Energy, mining
& utilities
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
60 $12,000
$11,044
50 $10,000
41
38
Deal Value ($m)
40 32 $8,000
Deal volume
27
30 $6,000
20 $4,000
$4,538
10 $2,000
$832 $563
0 $0
2014 2015 2016 2017
18
18I think there’s a distinct possibility
41 27
Deals 2016 Deals 2017
that the output from these mines
could be diverted to China... Yancoal is still a
listed company here in Australia, and it has Value ($m) Value ($m)
an obligation to its shareholders to extract 563m 4,538m
maximum rent for any product it (From 28 deals) (From 21 deals)
sells. Avg. Value ($m)* Avg. Value ($m)*
Glyn Lawcock // Global Head of Mining Equity // UBS 20m
* Deals above $500m excluded
25m
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
Deals 2017
2 $4,249m
Large cap Average Deals 2014-16
2 $3,590m
Mid- 7 $245m
market 11 $514m
12 $44m
Small cap
13 $42m
Not 6
Disclosed 11
0 5 10 15 20 25
Number of deals
19
19Geographic spread
Queensland continues to be a net seller, whilst
international deals increased further with 50
businesses selling out to overseas buyers.
50
Deals where the
seller was from
Sell side transactions Queensland and there was
an international buyer.
(2016: 43 deals)
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). Corondo Coal
LLC acquired
Private equity investment continued, with ten Queensland acquisitions (nine in Wesfarmers Curragh
Pty Ltd for $700m
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
53
Corporation (QIC) for $1.0bn.
Deals involved both the
buyer and seller being
Queensland companies.
(2016: 67 deals)
QBiotics Group acquired
Ecobiotics for $130m.
Quadrant Private
95
Equity sold Icon
Deals where the seller was Tatts Group acquired Tabcorp Cancer Care to
from Queensland and the Holdings for $7.6bn. a consortium led
buyer was from another by Queensland
Australian state. Investment
10
(2016: 87 deals) Corporation (QIC)
Deals where the seller for $1.0bn.
was from Queensland
and the buyer was a
private equity fund.
(2016: 9 deals)
20Geographic transactions (net)
National transactions International transactions
90 90
95
70 87 70
50 68 70 45 50
50
38 43
30 31 26 30 26
23 21 24
10 10 9
5
(10) (10) (19) (29) (22) (26)
(30) (47) (30)
(56)
(50) (63) (69) (50)
(70) (70)
2014 2015 2016 2017 2014 2015 2016 2017
Sell Buy Net Sell Buy Net
26
Deals where the
buyer was from Queensland
Buy side transactions and there was an
international seller.
(2016: 22 deals)
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
Collins Food
26 deals. Flight Centre remained active internationally, with two acquisitions, Group acquired
16 KFC restaurants
whilst Queensland based Collins Food Group continued its KFC roll up, both located in the
internationally and domestically. Netherlands from
Yum! Brands, Inc for
$88m.
53
Deals involved both the
buyer and seller being
Queensland companies.
(2016: 67 deals)
QBiotics Group acquired
Ecobiotics for $130m.
69
Deals where the buyer was Acciona Infrastructure
from Queensland and the Australia acquired Geotech
seller was from another Holdings for $197m.
Australian state.
(2016: 56 deals)
21IPO update
IPOs by Industry 15yr Avg 2017
In 2017, a total of nine Queensland companies listed on
Energy, mining & utilities 5 3
the Australian Securities Exchange (ASX), raising a total Financial services 1 2
of $356m. This is in line with the previous four years TMT 1 2
which also saw nine IPOs in Queensland, whilst the 15 Consumer 1 1
year average is 10 Queensland listings per year. Real estate 1 1
Pharma, medical & biotech 1 0
Capital raised was lower than the $504m in 2016, but Industrials & chemicals 0 0
Agriculture 0 0
consistent with the average of $353m raised per year
Business services 0 0
since the global financial crisis (15yr average is $500m).
Construction 0 0
Post IPO trading varied widely for the newly listed, but Leisure 0 0
six out of the nine companies closed above issue price Transportation 0 0
by year end. Total 10 9
The largest listing by both capital raised and market Largest & smallest listing by offer / market cap (as at 29 Dec 2017)
capitalisation was Wagners (WGN), which operates in Largest listing Wagners Holding Company
the construction materials and mining services sector. Offer size ($m) $196.8
The offer size of $197m represented an implied market Market capitalisation $437.3
capitalisation of $437m, finishing the year up 39%. Smallest listing Lithium Consolidated Mineral Exploration
Offer size ($m) $5.3
Pitcher Partners acted as Investigating Accountants on Market capitalisation $18.0
two IPOs:
Qld’s second largest, National Tyre & Wheel Highest / lowest return since listing (as at 29 Dec 2017)
Limited (NTD), the Brisbane based tyre wholesale Highest investor return Mayur Resource Group
Subscription price $0.40
marketer and distributor which raised $59m, and
% Change to date 158%
finished the year up 24%; and
Lowest investor return Velocity Property Group
Qld’s most successful, Mayur Resources which
Subscription price $0.20
raised $13m, and was up 158% by year end.
% Change to date (62%)
Figure 14: Number of IPO transactions from 2013-17
Total Listings All Ords
12 7,000
10 6,000
2nd Half
5,000
8
3 1st Half
4,000
5 5
6 6
7 3,000 15yr average
listings
4
2,000 All Ordinaries
6
2 4 4 1,000
3
2
- -
2013 2014 2015 2016 2017
22
22About Pitcher Partners
Pitcher Partners is a national
Pitcher Partners is a full service accounting and
association of independent
business advisory firm with a strong reputation
firms.
for providing quality advice to privately-owned,
Liability limited by a scheme approved
corporate and public organisations. under Professional Standards Legislation.
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
Firm
1,280+ staff, in order to service our clients.
Pitcher Partners is also an independent member of Baker Tilly
International (BTI), one of the world’s leading networks of
locations
independently owned and managed accountancy and business
advisory firms. Our strong relationship with other BTI International
member firms, particularly in Asia Pacific, has allowed us to open
many doors across borders for our clients.
BRISBANE
+61 7 3222 8444
partners@pitcherpartners.com.au
NEWCASTLE
+61 2 4911 2000
newcastle@pitcher.com.au
SYDNEY
+61 2 9221 2099
partners@pitcher-nsw.com.au
PERTH ADELAIDE MELBOURNE
+61 8 9322 2022 +61 8 8179 2800 +61 3 8610 5000
partners@pitcher-wa.com.au partners@pitcher-sa.com.au partners@pitcher.com.au
$3.4bn
Worldwide revenue 2017 (USD)
33,600+
Partners and staff globally
1,280+
People nationally
147
Countries
145
Partners nationwide
23Get in
touch...
Pitcher Partners Corporate Finance Senior Team:
Warwick Face Ross Walker
+61 7 3222 8302 +61 7 3222 8406
wface@pitcherpartners.com.au rwalker@pitcherpartners.com.au
James Baker Kieran Wallis
+61 7 3222 8482 +61 7 3222 8383
jbaker@pitcherpartners.com.au kwallis@pitcherpartners.com.auYou can also read
