Simpson Grierson releases M&A report on offshore investors' view of New Zealand

Simpson Grierson has announced the release of its sixth mergers and acquisitions (M&A) report titled “Our Expanding Horizons 2024: Offshore perspectives on investment into New Zealand,” which explores local trends and opportunities in the M&A area.

“This year's survey represents a welcome vote of confidence from international investors and bodes well for a continued pick up in M&A activity in New Zealand,” said James Hawes, corporate partner at Simpson Grierson, in the firm’s news release.

The report surveyed 90 international investors who completed a deal in New Zealand. These investors, being knowledgeable about the region, may have valuable insights on future M&A trends in the country, said Andrew Matthews, head of corporate/commercial at Simpson Grierson, in the report’s introduction.

The report noted that it has been a difficult year for the local economy, given that inflation remains high and GDP is predicted to have contracted in the 12-month period from July 2023 to June 2024.

However, “the 2025 outlook appears rosier: the flat local economy has created favourable investment conditions, meaning we’re expecting to see a return to growth,” Hawkes said in the firm’s news release.

The report found that New Zealand’s economic challenges contributed to positive sentiments from international investors via lower target valuations and better deal sourcing opportunities. In this context, there may be a jump in activity, boosted by interest rate cuts, the report predicted.

The survey revealed that 98% of investors are considering further investments in this country within the next five years, with 40% of respondents open to making such investments in the very near term.

What investors seek

This year, investors are looking for good business fundamentals in a high-inflation and low-growth environment, solid customer demand, and an ability to pass on cost increases, Matthews said in the report.

The report predicted that foreign capital will drive growth in New Zealand following the COVID-19 pandemic. The survey showed a high demand for the country’s IP and technology, with investors positively viewing how local businesses have incorporated technology into their operations.

“Notwithstanding recent global economic and geopolitical challenges, survey findings tell us that Aotearoa/ NZ maintains its global reputation as an open, politically stable, and legally robust member of the Asia-Pacific group,” Hawkes said in the firm’s news release.