Busy year for deals despite political climate

Jackie Henry, senior partner at Deloitte Northern Ireland and chair of the Belfast MIPIM Taskforce with Cllr Donal Lyons, Belfast City Council, centre, and Gareth Graham of Oakland Holdings
Jackie Henry, senior partner at Deloitte Northern Ireland and chair of the Belfast MIPIM Taskforce with Cllr Donal Lyons, Belfast City Council, centre, and Gareth Graham of Oakland Holdings

Northern Ireland’s mergers and acquisition market is expected to see a busy year it is claimed today, despite the ongoing slightly by the political uncertainty surrounding Brexit and the continued stalemate at Stormont, the KPMG M&A Outlook for 2019 claims.

The report, which surveys M&A executives and advisors, found that three quarters of respondents expected activity here to be at or above 2018 levels as the region maintains its appeal as an attractive deal location.

However, 80% of respondents to the survey expressed concern that Brexit will have a negative or neutral effect on deal activity in the coming year.

The lack of Executive at Stormont, which has just recorded its second anniversary, is also said to be weighing on sentiment.

The data comes as Belfast property development firm Oakland Holdings has been announced as headline sponsor of the 80-strong delegation from Belfast traveling to this year’s international real estate investment conference MIPIM in Cannes to market Belfast as a global destination for major investment.

Russell Smyth, Partner, Corporate Finance at KPMG, said: “In the five years that we have been conducting this survey, 2019 is undoubtedly one of the most difficult to predict.

“Notwithstanding this, the Northern Ireland M&A market is relatively optimistic for the coming year.

“The busiest sectors are slated as agri-business and food, technology and energy and infrastructure which are all attracting global interest.”

Debt will once again be the primary source of deal funding (67%), with attractive terms, flexible instruments and the presence of new lenders in the market. Global and domestic private equity is expected to be the primary source for 17% of deals, while the use of existing reserves is also expected for a minority of transactions.

The report also showed that 67% of respondents expect 2019 to be a buyer’s market, a marked difference from the Republic where the majority (60%) expect sellers to be in the driving seat.

When it comes to the type of those buyers, the majority are expected to be either overseas multi-national companies, indigenous companies or multi-national companies operating in the local market.

Just 27% is expected to come from either domestic or global private equity, much less than the 48% slated for the market in the Republic.

Within the property sector, MIPIM brings together the most influential global players from all international property sectors, and is this year expected to attract around 2,000 exhibitors and 20,000 investors, developers, occupiers and other influencers from over 80 countries around the world.

This year’s delegation will, for the first time, include representatives from each of the five councils partnering with Belfast City Council in the Belfast Region City Deal bid.

“Any major city in Europe serious about promoting itself will be at MIPIM, and Belfast is no different,” said Cllr Donal Lyons, chair of the council’s city growth and regeneration committee.

“We return to MIPIM 2019 with a hugely positive story to tell, underpinned by our confidence that the Belfast region, and indeed Northern Ireland, is an outstanding place to invest.

“Belfast enjoyed its most successful year on record in the office market in 2018, as take-up figures doubled year-on-year. This was helped significantly by PwC’s announcement of its plans to move to Oakland’s Merchant Square, which comprises 250,000 sq ft of high-quality Grade A accommodation.”

Gareth Graham of Oakland Holdings said: “Belfast is a city with the imagination and entrepreneurial spirit to meet the demands of the commercial sector.

“We will seize every opportunity to make sure that the advantages and attractions of Belfast are heard far and wide.”