Australia’s financial services sector is set to experience greater Asian in-bound merger and acquisition activity as Japan explores opportunities in insurance and asset management businesses, according to an M&A executive.
Nomura head of mergers and acquisitions in Australia Grant Chamberlain said Japan had strong financial interest in Australian markets.
“We haven’t seen much Chinese interest and it’s an open question on whether we will see any as China has some of the largest banks in the world, but Japan on the other hand has a strong interest,” Chamberlain told InvestorDaily.
“In insurance and asset management, we’ll see more deals [as] they see Australia as an easy, low-risk place to start because we’re still growing quite strongly, but also it’s a much more stable market than some in South-East Asia.
“The opportunities are certainly there; it’s just a matter of fitting the right buyer to the right opportunity.”
Japan had to date led Asian investment in Australia’s financial institutions, he said.
“There’s a real need to grow and diversify earnings outside Japan and to hold global ambitions for the longer term,” he said.
The Japanese economy had no real impetus for growth off domestic investments due to bank debt from the 1990s asset bubble as well as the country’s declining population rate compared to the rest of the world, he said.
“The Japanese population over the next 50 years will fall from about 120 million people to 90 million. It’s very hard to grow your economy if your population’s shrinking at that pace, so they’ll look to find growth offshore,” he said.
The challenge for Australian businesses was to convince Asian buyers that Australia was open for engagement, he said.
The Japanese and Chinese were reticent to be proactive and would not make an approach “unless they know the door’s going to be open”, he said.
“That’s a gradual process, but they will far more likely be involved if there’s a formal process and they know the assets or business is for sale,” he said.
In December 2011, Mitsubishi UFJ Trust and Banking Corporation forged a distribution deal with AMP Capital Investors, while 100 per cent of Tower Australia, now operating as TAL, was acquired by Japanese insurer Dai-ichi Life last May.
Chamberlain said the increase in in-bound M&A activity would also occur in Australia’s natural resources, infrastructure and consumer sectors.
