Despite elevated interest rates and structural constraints, there are early signs of a resurgence in deal-making activity, with private equity investment in Australia doubling to $11 billion in the second quarter of 2025.
According to JP Morgan’s PitchBook 2025 Australia & New Zealand Private Capital Breakdown, the largest deal in Q2 was the $3.5 billion buyout of retirement communal space developer Aveo Group by AustralianSuper and Charter Hall Group (ASX: CHC) in June, which valued the company at $4.1 billion.
Other significant deals include Nomura‘s $1.8 billion acquisition of Macquarie Management Holdings in April and leading global investment firm KKR‘s $1.3 billion buyout of chicken farm operator ProTen in July.
While the total deal value was down for the half – 35% of the total deal value in 2024 - what’s also evident with PitchBook’s latest data is that global investors are capitalising on the scarcity of mega-funds in Australia and NZ.
Based on Pitchbook's numbers, PE deals with foreign investor participation have jumped to a whopping 78.3% in 2024.
“…the region’s overall macroeconomic stability, institutional maturity, and geopolitical neutrality preserved its appeal as a relatively low-risk destination for global capital,” Pitchbook notes.
Due to predictable cash flows and steady demand, Pitchbook also notes that the B2B sector, including enterprise-focused industries such as business outsourcing and back-office automation is seen as a reliable PE target.
This vertical market also provides opportunities for value creation through operational improvements and add-ons in a fragmented market.
Digital transformation also continues to fuel interest in the IT sector.
Pitchbook’s analysis suggests that Australia is well-positioned to capture opportunities thanks to its maturing digital economy, favourable regulatory environment and increasing corporate IT budgets.
Meantime, scarcity of mega-funds in Australia and NZ is also evident within the total deal volume.
While this was one of seven quarters to exceed the $10 billion mark in the last five years, the deal count was low, with just 64 deals compared to 74 in the previous quarter.
While venture capital (VC) deal value held steady at $3.4 billion in 2024, PE dealmaking proved more resilient, with 390 deals closing in 2024, due to add-on strategies and steady buyout activity.
Despite a modest recovery in overall VC exit count and value in 2024, IPO activity in Australia & NZ continued to lag, with only four VC-backed public listings during the year, well below historical levels, hindering the region’s ability to generate outsized venture returns.
However, primarily driven by major transactions such as the $16 billion buyout of AirTrunk, PE exit value surged from 2022 to 2024, nearly doubling to $27.9 billion.
While dry powder across PE and VC hit a record $36 billion in 2024, the capital was heavily concentrated in large funds, limiting early-stage investment and skewing opportunities toward more mature companies.
Overall, software remains the dominant sector accounting for 39.4% of total VC deal count across Australia & NZ, far outpacing the next largest category, B2B, which captured just 19.3%.
“Several drivers support this trend. For one, all businesses, from small and medium enterprises to large ones, have accelerated their digital transformation strategies,” Pitchbook notes.
