Insights on Australian Acquisition Finance Landscape: Key Considerations – Money Advice Experts in Services

In the Australian chapter of the Chambers Global Practice Guide for Acquisition Finance (2025), John Schembri, Head of Banking and Projects, along with Special Counsel Erin Cartledge, offer a comprehensive overview of the key legal and practical considerations for financing acquisitions in Australia. The historical context of M&A activity in Australia has made leveraged finance a well-understood and active area for financiers and sponsors alike. Traditionally, major domestic banks have been active in the acquisition finance market, but non-bank, institutional, and private credit funds are increasingly participating in this space.

Australia’s major domestic banks, including Australia and New Zealand Banking Group, Commonwealth Bank of Australia, National Australia Bank, and Westpac Banking Corporation, have traditionally played leading roles in arranging acquisition facilities. They often provide a significant portion of the debt commitments themselves. These banks face competition from foreign and local investment banks on large-ticket transactions, which typically require underwritten facilities.

Foreign banks like HSBC, MUFG, SMBC, Mizuho, Bank of China, and ICBC are actively participating in syndicated senior debt positions, especially with Chinese investments in Australia. Private credit providers and institutional lenders have gained significant market share, offering products like unitranche or Term Loan B facilities, and have been quicker in decision-making and execution due to holding credits on their balance sheets.

Private equity firms in Australia are primarily driving acquisition finance activities, with global and domestic players actively involved in financing transactions. Despite a relatively subdued M&A activity in 2024, refinancings, repricings, and shorter-term loan extensions were prevalent in the Australian loan markets. The article highlighted the impact of geopolitical challenges and economic uncertainty on M&A activities.

The lending landscape in Australia has seen a shift towards standalone Term Loan B facilities and unitranche loans, with major domestic banks offering more flexible terms, such as reducing or eliminating amortization and relaxing financial covenants. The increased presence of private credit providers has led to the adoption of terms from the US and European markets, including more borrower-friendly structures.

Regulatory scrutiny is expected to increase on the lending activities of private credit providers in the future, with the Australian corporate regulator, ASIC, considering regulatory framework enhancements to improve market integrity and investor outcomes. The article also discussed the nuances of documentation, governing law, security structures, intercreditor agreements, and enforcement mechanisms in the Australian acquisition finance landscape.

In conclusion, the article emphasized the importance of understanding the regulatory landscape, industry trends, and market dynamics in navigating the acquisition finance market in Australia. It highlighted the need for financiers and sponsors to adapt to evolving market conditions and regulatory requirements to ensure successful financing of acquisitions in the country.