16 Oct 2019

Foreign merger and acquisition action wanes but outlook still strong

5:40 am on 16 October 2019

New Zealand's light is still glowing bright on the international investment stage despite a pause of caution from investors this year.


Photo: 123RF

A report from law firm Simpson Grierson showed $US4 billion worth of deals were funded by inbound investment in the first half of 2019, down from a peak of $US4.3 billion in 2018.

New Zealand was simply following the trends seen globally, according to Simpson Grierson corporate partner Andrew Matthews.

"Deal-making may be buttoning off slightly after several years of growth and coming off a peak of 2018 and that's not really surprising when considered against some of the macro worldwide events that are fueling geopolitical uncertainty," he said.

The firm's survey of 80 overseas investors suggested the outlook for inbound investment in mergers and acquisitions remained positive, with more than three quarters looking to re-invest in the next three years.

"Ultimately the timeframe in which we see the intentions acted on will be driven by a range of factors," said Mr Matthews.

The survey indicated investors' generally feel New Zealand is an attractive investment option in the Asia Pacific region, particularly in consumer and technology sectors.

It said political and regulatory stability is seen as another reason to invest in New Zealand.

Mr Matthews said the most identified barrier for investors was the overseas investment regulatory regime, which saw investments requiring the approval of the Overseas Investment Office before they could proceed.

"I don't think it's a deterrent to doing deals. I think investors are just telling us that some of the policy settings could be tweaked to facilitate that."