04/02/2016 - 06:51

Coal king for 2016 deals: EY

04/02/2016 - 06:51

Bookmark

Save articles for future reference.

Deals and capital raisings in the mining and metals sector fell in 2015, according to EY, although asset sales from distressed parties coming onto the market could lead to an uptick in volumes in the year ahead.

Coal king for 2016 deals: EY
Gold was a top performer in 2015 corporate finance.

Deals and capital raisings in the mining and metals sector fell in 2015, according to EY, although asset sales from distressed parties coming onto the market could lead to an uptick in volumes in the year ahead.

The numbers show the reduction in commodity prices and consequent reduced earnings, combined with rising debts, led to the fifth straight year of deal decline in the sector.

Merger and acquisitions were worth $US40 billion globally last year, down 10 per cent on 2014, while the number of deals completed fell 34 per cent.

Capital raisings totalled $US228bn, a 5 per cent fall, while IPO values dropped 78 per cent.

About two thirds of deal value was in the developed world, with gold and other precious metals holding up particularly strongly.

Gold deals measured by increased 29 per cent, while by contrast, iron ore was smashed, down 36 per cent.

Deal value in Australia fell 10 per cent, excludig South 32, while volumes halved.

EY mining and metals transactions advisory lead (Oceania) Paul Murphy said a continued fall in the coal price would mean the sector should dominate in 2016.

“There are some excellent top tier coal assets in Australia that are likely to change hands this year,” he said.

“Cost cutting, productivity measures and the benefit of the falling Australian dollar helped delay decisions in 2015 but the weight of corporate debt in an environment of commodity price uncertainty will bring people to the table."

FInancing such assets was becoming difficult however due to activism.

"High-quality Australian coal is well positioned to fill the growing energy demand in South-East Asia,” Mr Murphy said.

“Those that understand that, and the cyclical nature of the mining sector, are looking at this opportunistically.”

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options