This is Allens

It's an exciting time to be an M&A lawyer advising private capital investors. While the muted investment environment has been challenging in recent years, investors are constantly seeking to unlock value and capitalise on opportunities.

We're starting to see green shoots across various sectors and conditions becoming riper for deals to happen. Many investors have a significant amount of dry powder to be deployed, while others are reaching for the exits.

The huge influx of private capital we've seen in the market, and competition for quality assets, is making this investment cycle particularly interesting. However, deals have continued to take some time to execute, and buyers and sellers are needing to find ways to bridge the valuation gap between them.

The growth of the Australian superannuation system in size and sophistication means it’s been exciting to see super funds becoming increasingly direct and active investors across a range of asset classes, including infrastructure, energy and renewables, private equity and real estate.

It's pleasing to see the focus on attracting foreign capital into Australia in the recent FIRB reforms.

We've seen a lot of private capital being deployed through consortia or co-investment structures. These structures can give investors access to a greater range of investment opportunities and direct line of sight into assets alongside their trusted investment partners.

However, in exits where investors are part of a consortium, we have experienced sale processes taking more time and being more complex. There can also be interesting shifts in dynamics between consortium parties, particularly where consideration needs to be given to strategically navigating pre-emptive rights regimes.

Managing regulatory processes is going to be increasingly crucial to deal execution, including in light of the recently announced Australian merger clearance and foreign investment reforms. Australia has long been considered an attractive destination for foreign investors. It will be essential for the Australian Government to find the right balance between maintaining foreign investor confidence, while giving appropriate consideration to national security concerns and achieving compliance objectives without imposing undue regulatory burden.

It's important that foreign investors give early consideration to FIRB issues, as this can impact transaction structuring and timing. As legal advisers, we assist our clients to navigate the nuances of the FIRB regime and determine an effective FIRB strategy.

It's pleasing to see the focus on attracting foreign capital into Australia in the recent FIRB reforms, as well as FIRB's current practices, reflected in its updated policy. In a positive development, FIRB will now be providing refunds to unsuccessful bidders in competitive processes, and this should encourage early engagement with FIRB. There will also be more streamlined processes for repeat foreign investors who have a good compliance track record with FIRB and Australian laws, where they are investing in non-sensitive sectors.

We'll hopefully see measures such as these improving Australia's responsiveness to the concerns of global capital, and translating into more efficient FIRB and M&A processes.