That was then, this is now

Over the next few years, global and regional firms competed against - and collaborated with - top local managers to acquiring plumb Australian assets. The list of targets included the great and the good of domestic consumer brands, including the likes of Cole Myers and Borders. There was even an audacious, though ultimately unsuccessful, bid for national carrier Qantas.

The global financial crisis inevitably dampened that mood and sharply reduced banks' willingness to support large transactions. However, AVCJ Research's records indicate that Australia remains an active private equity market. More than $15 billion was deployed in each of 2006, 2007 and 2010. Last year a total of $12 billion was invested, not touching the pre-financial crisis peaks but not a long way off.

Yet for some reason 2013 didn't really feel like one of those boom years. The reason for this is plain to see when you study the transactions - 2013 was a big year thanks to two large-scale infrastructure deals, the ports of Botany and Kembla, and then the Port of Brisbane.

These assets, acquired by large global institutional investors - in one case in partnership with a local manager - accounted for more than half of the total annual deal flow. Small transactions continued to flow but the upper mid-market firms were, for various reasons, quieter than usual and large-scale corporate private equity buyouts remain patchy.

PE managers and advisors link the slower investment environment to the robust capital markets. In the first half of 2013 a number of GPs busied themselves by making the most of the opportunity to refinance debt packages on more attractive terms. They have also taken advantage of a revival in the IPO markets, which gathered pace during the second half of 2013. A total of nine PE-backed offerings raised record proceeds of $2.5 billion, and more offerings are expected in the first few months of 2014.

Exits and returns are a good thing but the same bull market hasalso contrived to push up valuations or at least expectation of business owners, making value investment more difficult.

The fundraising environment is hardly a ringing endorsement, with Australia-focused managers attracting commitments of around $800 million in 2013, half the previous year's total. It does suggest less dry powder coming into the market but then it is not a particularly deep market. None of the mid-market GPs closed funds in 2013; two might in 2014.

Nevertheless, it seems the stars are not yet aligned for Australia to recapture its former glories - and some might argue this is a good thing, citing the arguably reckless ambition of 2006-2007. However, as the markets saturate and business owners come back to reality, the opportunity to buy will once again present itself. Private equity investors are lying in wait.

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• Topics
• Australasia
• Buyouts
• Exits
• Australia
• buyout
• Exit
• IPO