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    APT   AU000000APT1

AFTERPAY LIMITED

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Australia to eclipse 14-year M&A record, powered by infrastructure, resources deals

09/30/2021 | 12:41am EST
FILE PHOTO: BHP's logo is projected on a screen during a round-table meeting with journalists

HONG KONG (Reuters) - Australia is set for its best year ever in M&A activity despite extended pandemic-induced lockdowns in its most populous states as cash-rich corporates and funds scoop up assets, with bankers seeing no sign of the momentum slowing.

Deals involving Australian companies totalled $329.2 billion in the first nine months of 2021, up nearly six times year-on-year and exceeding the same-period amount of the previous three years combined, Refinitiv data showed. The previous annual record was $139 billion in 2007.

The volumes were driven by a number of mega deals targeting listed infrastructure and resources firms.

Those included BHP Group's proposed $86 billion unification of its dual-listed company structure and the $14 billion sale of its petroleum business to Woodside Petroleum.

Infrastructure assets in Australia were particularly attractive to superannuation and pension funds, which are eager to deploy their low-cost capital for stable, long-term gains, bankers said.

"Investors into semi-regulated infrastructure assets have high confidence in the future cash flows of the assets they are buying," said Nick Sims, Goldman Sachs' Australia co-head of investment banking.

Goldman led the league table for announced M&A deals in Asia Pacific, followed by Morgan Stanley and UBS.

"Rates are going to stay low for the foreseeable future, if they do increase it will be at a slow pace, so infrastructure investors are investing with a long-term time frame," Sims added.

The deals were struck while many states in the country have been in and out of strict lockdowns since the onset of COVID-19.

"The lockdowns and the uncertainty around the demand side has really led corporate leaders to take a strategic reset of sorts," said Alex Cartel, Citigroup's <C. n> Australia head of investment banking.

"You had a number of corporates, private equity funds, sovereign wealth funds with access to capital markets, that had strategic ambitions that have said let's get going."

'PENT-UP DEMAND'

Deals targeting Australian companies, at $200 billion, made up 20% of the region's overall value, the second highest after China, compared to just 4% in the same period last year, according to Refinitiv data.

Tom Barsha, Bank of America's co-head of M&A in Asia Pacific, said Australia represented "a real shift" in the overall relative contribution to Asia Pacific volumes.

"There are a number of factors all coming together, including some pent-up demand from last year. Also noteworthy is the level of cross-border inbound activity. I'm not seeing signs of activity slowing down."

U.S. payments firm Square Inc made the year's biggest foray into Australia in August with the $29 billion acquisition of local fintech firm Afterpay.

Overall Asia Pacific deals reached a record $1.25 trillion from January to September, up 46% year-on-year, with Southeast Asia and private equity-backed transactions also scoring new highs, Refinitiv data showed.

Samson Lo, head of Asia M&A at UBS, said more assets owned by private equity firms were set to be put on sale, while mergers between special-purpose acquisition companies (SPACs) and their targets would likely be another volume driver.

"In addition, China could well come back with outbound deals by state-owned companies," he said. "2022 could well be another blowout year for M&A."

(Reporting by Kane Wu and Scott Murdoch; Editing by Sumeet Chatterjee and Muralikumar Anantharaman)

By Kane Wu and Scott Murdoch


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AFTERPAY LIMITED -2.37% 109.09 End-of-day quote.-7.55%
BHP GROUP -1.53% 38.03 End-of-day quote.-10.37%
BHP GROUP PLC 1.65% 1994 Delayed Quote.1.92%
SYDNEY AIRPORT LIMITED -0.12% 8.41 End-of-day quote.31.20%
WOODSIDE PETROLEUM LTD -5.10% 21.6 End-of-day quote.-5.01%
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Financials
Sales 2022 1 475 M 1 055 M 1 055 M
Net income 2022 -30,8 M -22,0 M -22,0 M
Net Debt 2022 591 M 423 M 423 M
P/E ratio 2022 -2 590x
Yield 2022 -
Capitalization 31 665 M 22 539 M 22 641 M
EV / Sales 2022 21,9x
EV / Sales 2023 14,7x
Nbr of Employees 1 300
Free-Float 77,7%
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Mean consensus OUTPERFORM
Number of Analysts 12
Last Close Price 109,09 AUD
Average target price 127,16 AUD
Spread / Average Target 16,6%
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Managers and Directors
Anthony Mathew Eisen Co-CEO, Executive Director & Managing Director
Nicholas David Molnar Co-CEO, Executive Director & Managing Director
Rebecca Lowde Chief Financial Officer
Elana Rubin Independent Chairman
Dana Stalder Independent Non-Executive Director
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