* Loans: Canadian investment firm taps third acquisition financing
SYDNEY, Sept 27 (LPC) - Canada’s Brookfield Asset Management has emerged as an unlikely saviour for financiers in Australasia, spearheading a rise in event-driven financings as broader lending activity in the region remains subdued.
The investment firm’s Brookfield Property Group unit has mandated three banks on a loan totalling around A$1bn (US$678m) to back the acquisition of Australian retirement village operator Aveo Group.
ANZ, Bank of China and Barclays are leading the deal, which is expected to be launched into syndication in early October.
The loan is Brookfield’s third acquisition financing this year. Earlier this month, it closed a NZ$1.49bn (US$954m) loan for its acquisition of Vodafone Group’s New Zealand business, in partnership with local infrastructure investment firm Infratil.
In August, Brookfield agreed a A$2.15bn multi-tranche loan supporting its leveraged buyout of Australian hospital operator Healthscope.
Those two loans account for nearly 29% of the US$8.65bn in M&A financings closed in Australia and New Zealand this year, helping drive a 77% rise in volumes from US$4.88bn signed in the same period last year, according to Refinitiv LPC data.
That surge in M&A lending comes as overall loan volume from Australia and New Zealand has fallen. Some US$54bn of loans has been raised this year, 28% lower than US$75bn generated in the first three quarters of 2018.
LEVERAGED LIFELINE Brookfield’s latest A$1bn loan has added to the growing M&A loan pipeline from Australia.
A A$1.4bn-equivalent dual-currency financing for private equity giant KKR’s buyout of Tim Tam biscuit maker Arnott’s is in syndication, while Hong Kong-based private equity fund PAG Asia Capital (HK) is raising about A$300m for its LBO of quick service restaurants operator, Craveable Brands.
Limited deal flow and an abundance of liquidity among lenders has meant many borrowers have been able to strike more favourable financing terms. From the creditors’ perspective, a steady downward pressure on loan pricing has led to increased competition for more lucrative, new-money transactions.
Brookfield’s two previous acquisition financings have been runaway hits with lenders – the Vodafone New Zealand acquisition financing attracted 11 banks in general syndication, apart from the six MLABs, while over 25 banks and institutional investors joined the seven MLABs on Healthscope’s LBO loan.
The strong response was not surprising given the attractive pricing – the Vodafone New Zealand loan pays interest margins of 225bp-250bp over BKBM for three and five-year money, while the Healthscope LBO loan pays margins are 400bp-425bp over BBSY for a five-year tenor.
Brookfield Property is no stranger to the loan market in Australia. In June, it landed green loans totalling A$880m to refinance facilities used for two energy-efficient office towers in Perth. The financing was the largest single-asset green loan syndication completed in Australia and pays a margin of around 170bp over BBSY.
Brookfield Property also closed a club loan of around A$1bn for Wynyard Place mixed-use commercial development in Sydney’s central business district in February 2018.