Acquisitions off the cards

NATIONAL: The frequency of large-scale retail acquisitions is expected to slow down as private equity firms come to grips with the global credit crunch, experts have predicted. The 2008 PricewaterhouseCoopers Retail and Consumer Outlook warned the intense levels of merger and acquisition activity in 2007 would not continue over the next two years.

According to the outlook, the sector had been hit by a 20 per cent slowdown in activity this year and IPOs had all but "dried up".

Corporate finance partner Greg Keys said while the market was already experiencing less "mega deals", the focus on mid-cap deals indicated a new area of growth.

"There's still plenty of equity in the market with 70 per cent of private equity funds remaining uninvested," he said. "However, due to the credit crunch, new deals need to be structured with six per cent more equity."

Private equity players were also delaying their exits until 2009, Keys said. "We're expecting up to 100 equity exits in the first half of 2009 alone. This could cause some crowding in the market."

For more on the 2008 PricewaterhouseCoopers Retail and Consumer Outlook, see Ragtrader's June 13 issue.