AUSTRALIA Trends and Developments Contributed by: Lewis Grimm, Alastair Gourlay, Dean Bao and Emily Tsoi, Jones Day
The Latest in Acquisition Finance in Australia in 2025 Introduction Australia stands out as one of the most bank - able and strategically important jurisdictions for acquisition finance in the Asia-Pacific region. Its combination of legal certainty, creditor-friendly enforcement, developed capital markets and political stability make it attractive to global sponsors, lenders and institutional investors. But while the terrain may appear familiar, its topog- raphy is distinct: legal, regulatory and tax frame- works diverge from US and European market norms. Sponsors and lenders who attempt to “cut and paste” US or Loan Market Association (LMA) documentation without adapting it to Aus- tralian rules, especially around security, finan- cial assistance and insolvency, risk unpleasant surprises when closing an acquisition or on any subsequent enforcement process. International deal‑makers encounter local twists, notably the shareholder‑approval “whitewash” , the Personal Property Securities Act 2009 (PPSA) registration regime and foreign‑investment clearances. These rules affect timing, covenant design and enforceability, so they cannot be treated as after‑thoughts. Four forces dominate 2025: the rise of private credit, a home‑grown Term Loan B format (the “Aussie TLB” ), hybrid capital (eg, to address thin‑capitalisation restric- tions) and tougher regulatory scrutiny of foreign investment and antitrust. In 2025, the acquisition finance landscape is evolving in response to shifting economic con- ditions, the growing influence of private credit, regulatory recalibration and the globalisation of documentation standards. Legal and structural considerations unique to the jurisdiction con- tinue to influence deal execution, risk allocation and capital structure design. For international
participants, the key to success is not simply importing foreign precedents, but harmonis- ing them with local legal architecture. This arti- cle explores the key trends shaping Australian acquisition finance, providing context for inter- national participants seeking to navigate it effec- tively. Private credit goes mainstream Private credit is now a regular feature of mid- market acquisition financings and is increasingly competing for upper mid-market and even the occasional large-cap deals. That said, its growth is complementary to, rather than a replacement for, traditional bank-led structures. Why private credit continues to gain momentum: • Execution certainty – private lenders can move quickly, often with fewer conditions precedent and simplified approval chains. • Structural creativity – borrowers are achieving broader covenant capacity, flexible baskets and greater latitude on incurrence-based leverage. • Sponsor familiarity – many global sponsors are now deploying Australian capital with credit terms that reflect what they routinely see in New York or London. Borrower-friendly terms such as covenant-lite, equity cures, builder baskets and incremental facilities are increasingly common on the larger private credit, Aussie TLB and US Term Loan B financings (though not yet uniformly standard) particularly where the borrower is backed by an offshore sponsor. However, in contrast to US and European TLB markets, Australian domestic deals (even those that have otherwise imported US- or European-style covenant packages) still tend to feature tighter downside protections and somewhat less operational flexibility, reflecting
34
CHAMBERS.COM
Powered by FlippingBook