The opportunity in Australia
Investment Philosophy
Responsible Investing

The Australian economy provides an attractive environment for the continued growth of a vibrant private equity market.

With a GDP almost of A$1.2 trillion, Australia is considered to have one of the best managed and most resilient economies in the world, characterized by GDP and productivity growth rates amongst the highest in the developed world over the last 20 years, low levels of national debt, low inflation and a highly skilled workforce. It is one of the oldest and most stable democracies, with a highly respected political and legal infrastructure and a regulatory framework for its financial services sector which is regarded as among the best in the world.

Although the Australian economy has contracted over the past twelve months, many economists anticipate that the decline will be much less severe than that being experienced in many Western economies. Australian Banks are regarded as amongst the most soundly capitalised and have to date not required government “bail-out” financing.

New Zealand, with a population of 4.1 million and GDP equivalent to A$150 billion, has a smaller economy than that of Australia. The New Zealand economy slipped into recession in late 2008 after a period of sustained growth. Over the longer term, economists are confident about New Zealand's economic prospects, as growth and development in the Asia Pacific region have a beneficial impact on tourism and demand for the country's products, particularly soft commodities.

Due to the established investment relationships and common time zones, Australasia is increasingly recognised as an attractive platform to grow businesses into Asia. For a number of international companies, Australia has become the preferred location for their regional headquarters.

Private Equity Drivers

Ironbridge recognises exploitable inefficiencies in Australasia where private equity activity is still significantly lower than that of more established markets. The Australasian market will continue to attract significant amounts of domestic and international capital, which in turn will drive the growth of the industry and further enhance its credibility as an exit route for business owners, advisers and management teams.

There is clear evidence of a pattern of divestment of family owned businesses to financial buyers as a result of generational changes and lack of exit opportunities into the stock market, while continued industry fragmentation provides opportunities for more complex "buy and build" strategies.

Although the pricing of debt has increased and leverage multiples have declined, mid-market transactions continue to attract financing in the local market.

The primary factors supporting the mid-market investment opportunity in Australasia include:

  • Strong and consistent historic GDP growth and economic activity
  • Strong corporate, legal and accounting framework alongside a stable political environment
  • Attractive platform for growth into adjoining markets
  • Australasian private equity market is less developed than the European or North American markets
  • Opportunities to buy industry leaders
  • Developed and liquid stockmarkets

Investment strategy