NEW ZEALAND Law and Practice Contributed by: David Weavers, Jesse Fairley and Matt Consedine, Russell McVeagh
Russell McVeagh Level 30, Vero Centre 48 Shortland Street PO Box 8 Auckland 1140 New Zealand
Tel: +64 9 367 8000 Fax: +64 9 367 8163 Email: enquiries@russellmcveagh.com Web: www.russellmcveagh.com
1. Market 1.1 Major Lender-Side Players
pricing on alternative financing structures before deciding on a final preferred structure. Some of these alternatives may involve a combination of bank debt and direct lenders/credit funds (eg, super-senior revolving credit facilities, Holdco Mezz structures). 1.2 Corporates and LBOs In recent years, acquisition activity has involved a mixture of corporate transactions and lever- aged buyouts. On the corporate side, these transactions tend to be led by local corporates with growth-by-acquisition strategies, although investment from large Australian corporates and global trade buyers in the New Zealand market is also common. Leveraged transactions are pre- dominantly led by international private equity firms (with an emphasis on Australasian private equity firms). There is also an active and growing set of domes- tic private equity firms, which tend to focus on mid-market transactions and have enjoyed a number of successes in recent years. In compar- ison to their international counterparts, domestic private equity firms tend to place less emphasis on maximising leverage to enhance returns.
Banks provide the majority of funding for acqui- sition financing in New Zealand. The market is largely dominated by the four main Australian- owned banks operating in New Zealand, which often provide the cornerstone of debt commit- ments. A number of other international banks are also prevalent in the market (mostly as syndicate members or to provide underwriting capacity for large transactions) and there is increasing mid- market participation from locally owned banks. Alternative sources of debt financing, such as direct lenders/credit funds, have not historically formed a significant part of the acquisition finance market in New Zealand. However, both interna- tional and domestic direct lenders (such as New Zealand superannuation funds) and credit funds are playing an increasingly important role in New Zealand acquisition financing transactions, par- ticularly on private equity sponsor-led transac- tions or financing sectors where traditional bank lenders have shown less appetite in recent years (eg, due to ESG considerations). Given the vari- ety of options available, private equity sponsors and their debt advisors often seek terms and
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