Prior to the Greencross transaction, the Australian leveraged finance market had shown signs of evolving from its traditional bank dominated origins in terms of the available sources of capital.

However, since that time, as a result of current macroeconomic events, M&A activity has been subdued in Australia and New Zealand, which is consistent with the global market activity, as the combination of geopolitical uncertainty, inflation and corresponding increases in base rates have made price discovery for both sellers and buyers challenging.Ĭonsequently, after recording a slight uptick from Q4 2022 to Q1 2023, leveraged loan values in the Australasian market, which includes Australia, New Zealand, Fiji and Papua New Guinea, declined from US$1.52 billion to less than half that (US$640 million) in Q2, despite a marginal increase in deal volumes.īut, as expectations increase of a bounce back in M&A activity in Australia and New Zealand in the second half of 2023, what will the leveraged finance market landscape look like for sponsors? Current landscape At the time, it appeared to herald a new dawn for the financing of acquisitions of Australian businesses backed by large private equity sponsors with Australian-dollar denominated leveraged financing comparable to the scale and sophistication of the financing options available in the European and North American leveraged finance markets.

Just over a year ago, TPG broke new ground with an AUD$1.5 billion (USD$1.1 billion) unitranche debt package, which was used to recapitalize Australian pet care company Greencross-the largest Australian-dollar denominated unitranche deal for an Australian borrower to date.

Leveraged loans arrangement