05 Nov Korea and Australia – Observations on M&A and Institutional Investment Opportunities By Ashurst
The 40th AKBC/KABC Joint Meeting is a fantastic achievement and a timely milestone to reflect on the recent M&A and investment trends.
Australia and Korea have had a strong trading relationship for many years, enhanced with the establishment of a free-trade agreement (KAFTA) in December 2014. From an Australian perspective, we have observed the following during the five years since then:
- continued strategic investments in resources, such as coal, iron ore and LNG (led by long-term investors KEPCO, POSCO, KORES and KOGAS);
- Korean institutions have increasingly focussed on Australian alternative asset classes, driven by the availability of capital in Korea and opportunities to generate stable returns in Australia (particularly in real estate and infrastructure – with pension funds such as NPS and institutional funds such as Mirae Asset, AIP and Inmark leading the charge); and
- more recently, significant moves into previously untapped industries, such as Innocean’s acquisition of ASX-listed Wellcom Group – the first of its kind, by a Korean institution, in terms of both industry sector, acquisition structure and size of the investment.
The above is a clear tribute to the critical role AKBC and KABC plays in bridging the interests of Korean and Australian institutions, and sets the scene for an exciting future in M&A and investment opportunities.
Notably, while global headlines are focussed on geopolitical developments involving the two Koreas or the trade wars among key global economies, Korea’s status as Australia’s 4th largest trading partner remains unaffected.
Looking ahead in this context:
- significant opportunities continue to exist in Australia – particularly in the growth sectors which have the potential to be further explored and capitalised, such as education, premium food and beverages, financial services and commercialised innovation and technology (including fintech);
- the level of activity in both public and private capital markets in Australia (the latter having been the traditional focus) will experience some change, as competition increases in unlisted investment opportunities and capital is directed to potentially overlooked areas including listed M&A targets (with the Innocean/Wellcom transaction noted above being a good recent example); and
- the opportunities for Australian institutions to invest in Korea will continue to grow. In addition to Macquarie – now a local giant in both an Australian and Korean sense – Australian asset managers such as IFM and AMP have been quite successful procuring Korean institutional mandates, and successfully investing in Korea’s infrastructure is a continued focus for foreign capital managers.
As cross-border M&A advisers we are extremely excited by the outlook and the opportunities ahead. It is worth remembering, lastly, that many of the crossborder investment opportunities arose as a result of the AKBC and KABC Joint Meetings, and it is a remarkable achievement for these meetings to successfully have taken place over 40 years.