Kiwis lift their urge to merge

Local conditions are also underpinning interest. 

“The NZX has had good year off the back of this increased global confidence,” says McNaught. “We’re also seeing other confidence-boosting factors coming into play; such as the launch of Fonterra’s share fund, and the Christchurch rebuild getting underway.”

However, unlike the rest of the world, although our appetite to transact is improving, our capacity to do so is expected to remain unchanged.

“New Zealand firms appear to be facing less pressure to deleverage, possibly due to our low interest rate environment,” says McNaught.

“The implications of this are not immediately concerning – although we should bear in mind the potential future impact of our current high levels of debt. 

“This could threaten earnings if interest rates begin to rise further down the track; and affect our competitiveness against overseas buyers with greater debt capacity.”

 Key findings from the latest edition of KPMG’s M&A Predictor include:

• New Zealand appetite levels (based on forward P/E ratios) are up 19% since June 2012. This compares to 15% increase in global appetite over the same period.

• For the first time in two years, the Global M&A Predictor expects both the capacity to transact and the appetite for deals to improve.

• Current levels of debt among New Zealand’s largest companies are still relatively high compared with global standards; and

• New Zealand deal volumes appear to have stabilised.

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