In-Depth Acquisition and Leveraged Finance Edition 13

Introduction

Australia has a mature and highly competitive acquisition finance market, supported by deep relationships among domestic banks, international banks, investment banks, institutional investors and private credit funds. The four major domestic banks and the key global investment banks continue to play prominent arranging and underwriting roles, particularly for investment grade and large cap corporates, but non-bank lenders are now an established part of the market rather than an alternative used only where bank debt is unavailable. Sponsors and corporate borrowers commonly run bank and private credit options in parallel, with the preferred solution turning on leverage, pricing, covenant flexibility, certainty and speed of execution.

Traditionally, an Australian acquisition finance package featured an amortising term loan A (although amortisation is now uncommon), together with a bullet term loan B, to fund the acquisition of the target group. These facilities would generally be accompanied by a pari passu revolving facility designed to meet the target's working capital and contingent instrument needs post-acquisition. Capital expenditure or acquisition facilities were also frequently included (generally on a committed basis).

Subordinated debt provided by specialised institutions (usually in the form of mezzanine loans or local capital markets products) remains relevant for larger or more complex transactions, although mezzanine funding is now commonly provided on a PIK basis at a level above the bank group, being the holdco level. This enables sponsors and senior lenders to avoid much of the inter-creditor complexity that comes from having this subordinated debt provided at (or just above) the level of the senior debt. Loan documentation in the Australian market is usually heavily negotiated but is also relatively standardised, often following the Asia Pacific Loan Market Association precedents, thus enabling loans to be drafted, priced and syndicated to a wide pool of financiers.

Private credit is now firmly embedded in the Australian acquisition finance market, offering unitranche facilities and other bespoke debt products that are not typically available in the traditional bank market. Unitranche facilities, which combine senior and subordinated debt into a single instrument, remain particularly attractive to private equity sponsors. Their appeal lies in the flexibility they offer, especially on covenants and other terms that can be tailored to the transaction, and in the efficiency of execution that comes from dealing with a streamlined lender group (although these benefits can sometimes come at a higher price). Increasingly, however, the distinction between bank and private credit financing is blurring. Sponsors now often run bank, institutional and private credit processes in parallel or combine different sources within the same capital structure. The result is a more fluid market in which lenders are adapting their offerings to fit the size, risk profile and timetable of individual acquisitions.

Year in review

Australian dealmaking remained resilient during the first half of 2026 despite geopolitical volatility and the failure of several anticipated mega-deals to proceed. Total deal value for Australian M&A reached US$63.2 billion across 497 transactions in the period, a 28 per cent increase year on year and only marginally below the US$63.8 billion recorded in the second half of 2025. This was one of Australia's strongest first-half results in recent years, notwithstanding that neither the proposed A$18 billion acquisition of BlueScope by SGH and Steel Dynamics nor a potential Rio Tinto/Glencore merger proceeded. Activity spanned a range of sectors, with particular depth in resources, infrastructure and industrials. Mining-led value accounted for US$18 billion across 38 deals.

Private capital activity increased on all fronts during the first half of 2026. Sponsors are increasingly treating volatility as a structural feature rather than a temporary disruption, and that shift, combined with dry powder and ageing portfolio assets, continues to drive M&A activity. Sponsor exit value reached US$14.5 billion across 79 deals (more than 94 per cent above the second half of 2025), marking a pronounced increase in exits relative to previous years. The shift was most visible in a series of strategic exits (which in some cases occurred after initial planned IPO exits):

1. Permira agreed to sell I-MED Radiology to Jardine Matheson for A$8.6 billion;
2. Bain Capital agreed to sell Estia Health to Stonepeak for A$12.5 billion; and
3. TPG agreed to sell Made Group to Danone for A$1.5 billion.

However, these exits were matched by renewed deployment. Notable buyout transactions include the successful A$9.9 billion bid by Dragoneer, W.R. Berkley and Amwins for the Steadfast Group and IFM Investors' proposed US$16.5 billion bid for Atlas Arteria. Both of these transactions illustrate the continuing sponsor appetite for public-to-private opportunities, particularly in infrastructure and businesses with resilient earnings.

M&A activity translated into several substantial debt packages, particularly in the second quarter of the year. The standout local deal was Qube's A$6.75 billion five-tranche financing, which supported the approximately A$11.9 billion take-private of Qube Holdings by a consortium led by Macquarie Asset Management, including UniSuper and Pontegadea. The financing was underwritten by 10 banks and ultimately allocated among 54 banks and BlackRock. Other large financings included approximately US$2.7 billion-equivalent for GIC and Brookfield's acquisition of National Storage REIT, A$3.1 billion for Sembcorp's acquisition of Alinta Energy and US$2 billion raised by Yancoal in connection with its acquisition of an 80 per cent stake in Kestrel Coal. The financing of Bain Capital and CC Capital's acquisition of Insignia Financial, which included A$1.744 billion and US$400 million seven-year cov-lite term loan Bs together with an A$294 million revolving facility, also demonstrated the depth of the institutional market. Strong syndication outcomes and non-bank participation showed that the boundary between bank and institutional capital continues to converge. Despite these large transactions, financing support for M&A transactions still varies with credit quality, and banks and private credit funds frequently obtain credit risk insurance to manage risk.

Refinancings nonetheless continued to account for the bulk of loan transactions in Australia. Northern Star Resources closed an A$1.94 billion refinancing in April 2026 and Endeavour Energy closed an A$2.44 billion refinancing in August 2026. Repricings and amend-and-extend activity also continued, with many borrowers achieving significant pricing reductions, in part due to the competitive lender market. Patties Foods Group extended its A$654 million loan to October 2030 and cut its margin to BBSY + 350bps, around 200 basis points below its 2023 opening margin, while Fitness and Lifestyle Group extended A$1.5 billion of senior and mezzanine loans by two years with an HPS Investment Partners-led group. On balance, the maturity wall has been deferred rather than worked through.

Private credit remained a significant and increasingly versatile source of financing in Australia during 2026. Although growth moderated and investors became more selective, private lenders continued to demonstrate their capacity to support transactions beyond conventional sponsor unitranche lending, including large-cap and technology infrastructure financings. This was illustrated by Firmus Technologies' US$10 billion debt facility, announced in February 2026 and led by Blackstone with support from Coatue, to fund the rollout of its Australian AI factory platform. As one of the largest private debt financings announced in Australia, the transaction demonstrated the growing capacity of private lenders to provide capital at a scale traditionally associated with syndicated bank and capital markets transactions.

That growing scale and sophistication were accompanied by closer regulatory oversight. During 2026, Australian Securities and Investments Commission (ASIC)'s focus on private credit moved from consultation to active supervision, with governance, valuation, disclosure and conflicts management identified as areas requiring improvement and poor practices designated an enforcement priority. For lenders, fund managers and borrowers, the resulting emphasis on stronger governance, more robust valuations and timely portfolio information should help support the private credit market's resilience and sustainable development as it continues to mature.

Data centres and AI infrastructure remained a standout source of financing activity in 2026, attracting capital from bank, institutional and private credit markets. Blue Owl-backed STACK Infrastructure secured an A$2.744 billion five-year senior secured green loan to develop its 252 MW MEL02 campus in Melbourne, while the Firmus financing discussed above formed part of the same broader theme. AirTrunk also secured a US$2.325 billion three-year secured green bullet loan to develop its JHB2 campus in Johor, Malaysia. Together, these transactions demonstrated both the depth of capital available for digital infrastructure and the variety of structures being used to fund it, ranging from syndicated green project and asset-backed facilities to large-scale private debt.

The STACK and AirTrunk transactions also illustrated the continued role of labelled sustainable finance where the use of proceeds and environmental outcomes, including energy and water efficiency, can be clearly identified and measured. That opportunity is accompanied by greater scrutiny of environmental claims. The Australian Competition and Consumer Commission (ACCC) maintained its focus on greenwashing and environmental claims, while ASIC's first three greenwashing court outcomes resulted in combined penalties of A$34.9 million for misleading claims concerning environmental, social and governance (ESG) screens and investment exclusions. Despite this, banks continue to show support for sustainable finance, while private credit providers increasingly capitalise on opportunities to finance borrowers in sectors (e.g., coal and defence) where banks have scaled back their exposures as a result of ESG concerns.

Real estate financing in the Australian build-to-rent and social and affordable housing markets have continued to grow, supported by both foreign and local investment, particularly from large global real estate funds and Australian superannuation funds. This growth has been driven, in part, by strong rental market demand and government policy settings, which continue to shape the sector. For example, a second tranche of affordability standards applies to assessing events from 26 March 2026. Under those standards, affordable dwellings must qualify as moderate- or lower-income dwellings, lower-income dwellings must comprise at least 2 per cent of all dwellings, and an eligible community housing provider must identify prospective tenants.

The new mandatory ACCC merger control regime commenced on 1 January 2026, with voluntary notification available from 1 July 2025. The practical effect is now visible: the onus sits on deal parties to satisfy the ACCC that a proposal is not anti-competitive, whereas the burden previously sat with the ACCC. Deal timetables now incorporate pre-notification engagement and statutory review periods, with earlier competition analysis, longer lead times and more rigorous execution planning becoming standard. That said, we have not seen this have a significant impact on acquisition financing.

Regulatory and tax matters

Regulation of foreign investments in Australia

The Australian Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA) and its associated regulations (administered by the Foreign Investment Review Board (FIRB)) regulate the making of investments by foreign persons in Australian companies and assets (and in some cases offshore companies with the requisite Australian connection).

In general, the legislation regulates four kinds of actions:

1. significant actions;
2. notifiable actions;
3. notifiable national security actions; and
4. reviewable national security actions.

Significant or notifiable actions

The Treasurer has the power to make orders in relation to significant actions (including blocking them, ordering divestments or imposing conditions) if the Treasurer considers the transaction to be contrary to the national interest. Approval only must be sought for these if they are also notifiable actions or notifiable national security actions (but see below regarding the Treasurer's call-in powers).

Notifiable actions are a category of transaction that requires approval. Most notifiable actions are also significant actions (meaning the Treasurer has the above powers).

Common significant, or significant and notifiable, actions are:

1. the acquisition of 20 per cent or more of an Australian entity that is valued above the current monetary thresholds (currently A$347 million, or A$1,498 million where a higher treaty threshold can be relied on and the business is not a sensitive business) (thresholds are indexed annually on 1 January);
2. the acquisition by a foreign person who is a foreign government investor of 10 per cent or more (and sometimes less than 10 per cent) of an Australian entity or business (subject to a de minimis exemption, where the acquisition is of an offshore entity with an Australian subsidiary that meets certain tests);
3. the acquisition of 10 per cent or more (and sometimes less than 10 per cent) of an Australian entity that carries on an agribusiness where the investment is valued above the then current monetary threshold;
4. the acquisition of an interest in land valued above the then current monetary threshold (which varies depending on the kind of land and who the acquirer is), unless an exception applies; and
5. the acquisition of 10 per cent or more (and sometimes less than 10 per cent) of an Australian media business.

The interests described above include securities, voting interests and the securities or voting interests one would hold if rights such as options were exercised. There are also special rules relating to veto rights, which can be deemed to be an interest of 20 per cent for certain purposes.

A foreign government investor (FGI) in general includes a foreign government or agency, sovereign wealth funds, state-owned enterprises, public pension funds, public universities and the like, or corporations, trustees of trusts or general partners of limited partnerships where, in respect of the corporation, trust or limited partnership:

1. FGIs from one country hold 20 per cent of the interests; or
2. FGIs from multiple countries hold 40 per cent or more of the interests, subject to an exception for passive investors (which does not apply to the 20 per cent limb).

Notifiable national security actions

The Treasurer has the power to make orders in relation to notifiable national security actions (including blocking them, imposing conditions or ordering divestments) if the Treasurer considers the transaction to be contrary to national security (which is narrower than the national interest test above). These actions require approval. An action is a notifiable national security action if the action is taken, or proposed to be taken, by a foreign person and the action is any of the following:

1. starting a national security business;
2. acquiring an interest of 10 per cent or more (and in some cases less than 10 per cent) in a national security business;
3. acquiring an interest of 10 per cent or more (and in some cases less than 10 per cent) in an entity that carries on a national security business;
4. acquiring an interest in Australian land that, at the time of acquisition, is national security land; or
5. acquiring a legal or equitable interest in an exploration tenement in respect of Australian land that, at the time of acquisition, is national security land.

A national security business is one that is carried on wholly or partly in Australia whether for profit or gain and is publicly known, or could be known after reasonable enquiry, that the business:

1. is a responsible entity or direct interest holder of critical infrastructure assets as defined in the Security of Critical Infrastructure Act 2018 (this covers certain assets across 22 different kinds of critical infrastructure sectors, including aviation, banking, broadcasting, data storage or processing, defence industry, domain name system, education, electricity, energy markets, financial market infrastructure, food and grocery, freight infrastructure, freight services, gas, hospitals, insurance, liquid fuel assets, ports, public transport, superannuation, telecommunications and water and sewerage);
2. is a carrier or nominated carriage service provider to which the Telecommunications Act 1997 applies;
3. develops, manufactures or supplies critical goods or critical technology that are for military or intelligence use by Australian or foreign defence or intelligence agencies;
4. provides critical services to Australian or foreign defence or intelligence agencies;
5. stores or has access to information that has a security classification;
6. stores or maintains personal information of Australian defence and intelligence personnel collected by the Australian Defence Force, the Defence Department or an agency in the national intelligence community, which, if accessed, could compromise Australia's national security;
7. collects, as part of an arrangement with the Australian Defence Force, the Defence Department or an agency in the national intelligence community, personal information on defence and intelligence personnel, which, if disclosed, could compromise Australia's national security; or
8. stores, maintains or has access to personal information as specified in the above bullet point, which, if disclosed, could compromise Australia's national security.

National security land is any of the following that is in Australia, and is owned or occupied by the Commonwealth for use by the Defence Force or the Department of Defence:

1. an area of land or any other place (regardless of whether it is enclosed or built on);
2. a building or other structure;
3. a prohibited area, within the meaning of the Defence (Special Undertakings) Act 1952; and
4. the Woomera Prohibited Area.

It also includes land in which the Commonwealth, as represented by an agency in the national intelligence community, has an interest that:

1. is publicly known; or
2. could be known upon the making of reasonable inquiries.

Reviewable national security actions

Reviewable national security actions are transactions with an Australian nexus that are not significant actions, notifiable actions or notifiable national security actions. The Treasurer has the power to make orders in relation to these kinds of transactions (including to block them, impose conditions or order divestments) if the Treasurer considers the transaction to be contrary to national security. Approval does not have to be sought (but see below regarding the Treasurer's call-in powers).

Call-in powers

Reviewable national security actions and significant actions for which approval is not sought are subject to the Treasurer's 'call-in' powers for a period of 10 years if the Treasurer considers that the transaction poses a national security concern. Seeking approval cuts off the Treasurer's powers. The Australian government encourages seeking approval for certain kinds of actions.

Money-lending exemption

Although FIRB approval is principally a matter of concern from an M&A perspective (where ownership of the shares or assets is actually transferred), it is also relevant in a debt finance context given that 'obtaining an interest' also extends to the grant of a security interest over shares or assets or the enforcement of security.

In a finance context, there is an exception from this requirement if the interest is either held by way of a security or acquired by way of enforcement of a security, solely for the purpose of a money-lending agreement. This applies to persons whose ordinary business includes the lending of money (which is deliberately broad enough to capture institutions that are not authorised deposit-taking institutions (ADIs) and captures a subsidiary or holding company of a lender, a security trustee or agent, and a receiver or receiver and manager of an entity that holds or acquires the interest). This exception also applies to an ordinary course lender that is a 'foreign government investor', although in respect of an interest acquired by way of enforcement of a security, a foreign government investor is restricted in the amount of time it can hold an asset (12 months in the case of an ADI and six months in the case of a non-ADI, unless the foreign government investor is making a genuine attempt to sell the assets acquired by way of enforcement). The money-lending exception has more limited application where the security is over residential land, national security land or a national security business.

Approvals

The Commonwealth Treasurer has the sole power to determine whether a transaction is contrary to the national interest (in the case of significant actions or notifiable actions) or national security (in the case of notifiable national security actions or reviewable national security actions). Transactions that do not raise national interest or national security (as applicable) concerns are generally approved as a matter of course, although the need for FIRB approval should be considered where security is being granted over material Australian entities and the imposition of conditions around tax, data handling and the like is becoming routine.

Approved interests (as well as land and water entitlements) must be notified to the Register of Foreign Ownership of Australian Assets after completion. Other government approvals can also be required to take security over certain types of assets (such as mining and resource interests) that are subject to separate regulation.

Note that the above is a summary only. Australia's foreign investment rules are notoriously complex and are affected by non-statutory guidance, and legal advice should always be sought.

Interest withholding tax

Interest withholding tax (IWT) is generally applied at a rate of 10 per cent on gross payments of interest (or payments in the nature of, or in substitution for, interest) made by Australian resident borrowers to non-resident lenders (except where the borrower incurs the interest in carrying on business at or through a permanent establishment outside Australia or where the lender derives interest in carrying on business at or through an Australian permanent establishment or where other exceptions apply). IWT is a final tax and can be reduced (including to zero) by domestic exemptions, such as the public offer exemption, and the operation of Australia's network of double tax agreements (DTAs).

Under DTAs with Finland, France, Germany, Iceland, Japan, New Zealand, Norway, South Africa, Switzerland, the United Kingdom and the United States, there is no IWT for interest derived by a qualifying financial institution unrelated to, and dealing wholly independently with, the borrower (subject to certain exceptions). The definition of a financial institution generally covers banks but can include an enterprise that substantially derives its profits by raising debt finance in the financial markets or by taking deposits at interest and using those funds in carrying on a business of providing finance.

Under Australian domestic law, IWT may also be exempt where the debt satisfies the 'public offer' exemption (contained in section 128F or 128FA of the Income Tax Assessment Act 1936 (Cth)). Once the debt satisfies the public offer exemption, it is typically more marketable because an incoming lender generally remains entitled to the benefits of the exemption from IWT (subject to certain criteria being met). Broadly, the public offer exemption applies where an Australian company (or eligible unit trusts in certain circumstances) publicly offers certain debt instruments via one of several prescribed means, including (most commonly):

1. the debt instrument is offered to at least 10 persons, each of whom is carrying on a business of providing finance, or investing or dealing in securities in the course of operating in financial markets, provided none of those persons is known or suspected by the borrower to be an associate of any of the other persons; or
2. the debt instrument is offered to the public in an electronic form that is used by financial markets for dealing in debentures or debt interests.

In all cases, the offers must be genuine, which generally requires prospective lenders to be provided with sufficient information and time to properly consider the offers.

The type of debt that may qualify for the public offer exemption consists, broadly, of debentures (which are defined to include notes) and syndicated facility agreements.

In the event that the debt instrument is in the form of a syndicated facility agreement, it can only benefit from the public offer exemption if additional conditions are satisfied, including that:

1. there are two or more lenders where each lender severally, but not jointly, agrees to lend money (or otherwise provide financial accommodation);
2. the agreement describes itself as a 'syndicated loan facility' or 'syndicated facility agreement'; and
3. the borrowers will have access to at least A$100 million at the time the first loan or other form of financial accommodation is provided.

The public offer exemption is not available where the issuer (or arranger acting as agent for the issuer), at the time of issue or invitation, knew or had reasonable grounds to suspect that a lender would be an 'associate' of the borrower who is:

1. a non-resident and the debenture or debt interest was not or would not be acquired by the associate in carrying on business at or through a permanent establishment in Australia; or
2. a resident and the debenture or debt interest was or would be acquired by the associate in carrying on business at or through a permanent establishment in a country outside Australia.

There is an exception where the associate acquired the debenture or debt interest in the capacity of a dealer, manager or underwriter in relation to the placement of the debt instrument, or a clearing house, custodian, funds manager or responsible entity of a registered scheme.

IWT relief also applies to certain foreign pension funds and sovereign funds. The IWT exemption will only apply to foreign pension and sovereign funds with (broadly) portfolio-like interests in the borrower, being interests in an entity that are less than 10 per cent of total ownership interests and do not carry an ability to influence the entity's decision-making.

Thin capitalisation

Broadly, Australia has a thin capitalisation regime that can operate to deny income tax deductions for interest expenditure on overly geared Australian groups investing overseas or foreign-controlled Australian groups that have debt deductions over the de minimis threshold of A$2 million for an income year (on an associate-inclusive basis).

The default test is the 'fixed ratio test', which, in broad terms, limits net debt deductions for an income year to 30 per cent of a taxpayer's 'tax EBITDA'. Broadly, this is worked out by taking the taxpayer's taxable income or loss for the income year (disregarding the operation of the thin capitalisation rules) and adding back net debt deductions, certain deductions for tax depreciation and capital works. Any net debt deductions that exceed this limit can be carried forward for up to 15 years and utilised in a subsequent income year in which there is excess capacity subject to the satisfaction of recoupment tests and provided a choice is not made to use any of the elective tests (as noted below).

Where certain conditions are satisfied, a choice can be made by a taxpayer to apply the third-party debt test, which essentially allows debt deductions attributable to third-party debt. Broadly, a lender must only be permitted to have recourse to a taxpayer's Australian assets for third-party debt to qualify (among other conditions). Furthermore, a taxpayer will be limited to using the proceeds of the debt to fund commercial activities in connection with Australia.

Finally, where a taxpayer is a member of a worldwide group with audited consolidated financial statements, it may be able to choose to apply the group ratio test, which may, in some cases, allow deductions for net debt deductions in excess of the amount permitted under the fixed ratio test.

Separate thin capitalisation rules apply to ADIs and Australian plantation forestry entities. These rules involve three methods to calculate the maximum allowable debt of a taxpayer. The most commonly relied upon method is the safe harbour, which broadly allows Australian assets to be funded by up to 60 per cent of the value of a company's Australian assets (or a debt-to-equity ratio of 1.5:1).

The debt deduction creation rules are a set of integrity rules that broadly disallow debt deductions on related party funding to an entity to fund:

1. the acquisition of an asset (or an obligation) from an associate; or
2. payments or distributions to an associate.

The debt deduction creation rules apply in priority to the thin capitalisation rules.

Security and guarantees

Common security packages

The Personal Property Securities Act 2009 (Cth) (PPSA) sets out the principles applicable to the grant and perfection of security interests in Australia, principles that should be relatively familiar to anyone who has had experience in a common law jurisdiction.

The PPSA introduced a uniform concept of a 'security interest' to cover all existing concepts of security interests, including certain mortgages, charges, pledges and liens. It applies primarily to security interests in personal property that arise from a consensual transaction that, in substance, secures payment or performance of an obligation. It also applies to certain categories of deemed security interests, so that like transactions will be treated alike. 'Personal property' is broadly defined and essentially includes all property other than land, fixtures and buildings attached to land, water rights and certain statutory licences.

In a typical domestic secured lending scenario, security is most commonly taken by the relevant security providers entering into a general security deed that covers all of the relevant security providers' assets and undertakings (the local equivalent of a debenture). Such an instrument can attach to all forms of 'personal property' (both tangible and intangible) and operates in a similar way to a debenture or security agreement. Accordingly, all-asset security can be obtained from corporate grantors simply and effectively.

In an acquisition context, the general security deed is often supplemented, where necessary, by a specific security deed over the shares of an Australian target (ie, a share mortgage) granted by its special purpose vehicle or offshore parent. This is often a necessary part of the security structuring where restrictions on the provision of financial assistance (dealt with further below) mean that direct target security cannot be obtained on closing the acquisition. In each case, these security interests are supported by corporate guarantees, which are typically documented in the credit agreement.

Registration of a financing statement on the Personal Property Securities Register (PPSR) is the usual method of perfecting these security interests and establishing their priority. Where the grantor is a company, registration should generally occur within 20 business days after the security agreement comes into force (or more than six months before an administration or winding-up begins) to avoid the security interest vesting under section 588FL of the Corporations Act. Some security interests require earlier registration to obtain their intended priority or avoid vesting. A secured party may register from the time it believes, on reasonable grounds, that it is or will become a secured party in relation to the collateral. Lenders should also search the PPSR for prior security interests registered against relevant entities in the structure, including Australian holding companies and targets and any offshore parents.

Security can be granted over real property (both freehold and leasehold) by way of a registered real property mortgage. Security is only generally sought where the real property in question has operational or economic significance. Unlike security interests that are dealt with under the PPSA, the grant of security over real property is dealt with on a state-by-state basis. However, from a practical perspective, there are few fundamental differences between the regimes in the various states. As with personal property and PPSR searches, the relevant land registries can, and should, be searched to determine what encumbrances or restrictions on title have been registered against the relevant property.

Financial assistance

Section 260A of the Corporations Act 2001 (Cth) imposes restrictions on a company providing financial assistance for the acquisition of its, or its holding companies', shares. Financial assistance includes not only the granting of security, but also the provision of guarantees and indemnities (among other things). While a transaction that breaches this restriction is not invalid, any person involved in the contravention of this provision may be found guilty of a civil offence and subject to civil penalties. This liability can be criminal where a person is dishonestly involved in a breach. This liability (both civil and criminal) can theoretically extend to the lenders.

The general prohibition on the provision of financial assistance is subject to certain exceptions. The most commonly utilised exception is the exception set out in section 260A(1)(b) of the Corporations Act (colloquially known as the 'whitewash' process), which enables the shareholders of the company to approve the proposed financial assistance. Given that an acquisition financing will invariably involve the grant of target security, the financial assistance rules are particularly relevant to this form of financing. For this reason, security over Australian target entities is generally granted within an agreed period post-closing (typically no less than 30 days) following the completion of the whitewash. This restriction does not affect the grant of security by any Australian-incorporated special purpose holding company, or any offshore parent over its shares in an Australian-domiciled entity, which can be provided in a more timely fashion.

Corporate benefit

Under Australian law, directors owe a number of duties to the companies to which they have been appointed. These duties are enshrined in the Corporations Act, as well as arising under general law, and include a fiduciary duty to act in good faith in the best interests of the company. In a secured lending context, these duties often come under scrutiny in circumstances where a subsidiary is asked to guarantee the debts of its parent or sister companies within the same corporate group. Where the party obtaining the benefit of a guarantee or security knows or ought to know that the directors have not acted in the best interests of the company in providing credit support, the guarantee or security will be voidable against that party. For wholly owned subsidiaries that are considering guaranteeing the debt obligations of their parent, the above duties are often viewed in light of section 187 of the Corporations Act, which enables a wholly owned subsidiary to adopt a provision in its constitution enabling it to act in the best interests of its holding company (and in so doing, will be deemed to be acting in the best interests of the company itself). Where section 187 of the Corporations Act is not available, care should be exercised to ensure that the corporate security provider derives some benefit from granting the guarantee or security and that granting the guarantee or security is in the best interests of the corporate security provider.

A guarantee or security could be set aside by a court if that court finds that the directors of the security provider have breached their duties and the lender was aware of that breach.

Administration risk

'Administration risk' describes the risk for a secured party that its security becomes subject to a moratorium if an administrator is appointed to a corporate security provider (which the directors of that entity are likely to do if the company is or is likely to become insolvent). Subject to the consent of the administrator or court order, a secured party is not entitled to enforce its security during the moratorium. This will be the case unless one of the exceptions applies, with the key exception being where the secured party has taken security over all, or substantially all, of the company's assets and the secured party has enforced its entire security interest within the 'decision period'. The decision period runs for 13 business days from the date the secured party was given notice of the appointment of an administrator or the date that the administration begins.

Owing to the above, a secured party who holds perfected security over only certain assets (and those assets alone do not comprise all, or substantially all, of the company's assets) will not be able to enforce its security during the moratorium. To address this risk where the primary collateral is limited to specific assets, a 'featherweight' security interest may be taken over all of the grantor's assets (other than the principal secured property) that secures a nominal sum.

Stamp duty

Mortgage duty is no longer payable in any Australian jurisdiction. Furthermore, while ad valorem duty is generally not payable on financing transactions, nominal duty will be payable on a finance document that contains a provision that effects or evidences a declaration of trust over non-dutiable property or unidentified property, and that document has been executed by any party in New South Wales or Victoria.

Australian insolvency regime and its impact on the grant of security

The Australian insolvency regime is codified in the Corporations Act and its associated regulations, and contains a number of provisions that can potentially affect the rights of a creditor of an Australian entity.

Under Australian law, transactions will only be vulnerable to challenge when a company does, in fact, enter into liquidation. Division 2 of Part 5.7B of the Corporations Act provides that a liquidator can bring an application to the court to declare certain transactions void. While an administrator is required, in their statutory report to creditors, to identify potential voidable transactions that may be recoverable by a liquidator (if appointed), the administrator does not have standing to challenge these transactions.

There are several types of transactions that can be found to be voidable:

1. unreasonable director-related transactions;
2. unfair preferences;
3. uncommercial transactions;
4. unfair loans; and
5. creditor-defeating dispositions (often associated with illegal 'phoenixing' activity).

Except for transactions entered into by companies in voluntary administration, operating under a deed of company arrangement, under restructuring or subject to a restructuring plan, transactions held to be unfair preferences or uncommercial transactions will only be voidable where they were also 'insolvent transactions'; that is, unfair preferences or uncommercial transactions that occurred while the company was insolvent, or caused the company to become insolvent.

Each type of voidable transaction has different criteria and must have occurred during certain time periods prior to administration or liquidation. The relevant time periods are generally longer if the transaction involves a related party.

An unfair preference arises in circumstances where a creditor receives an amount, in respect of an unsecured debt, greater than would have been received if the creditor had been required to prove for it in the winding-up of the relevant company.

Transactions have been held to be uncommercial where an objective bystander in the company's circumstances would not have entered into it.

In addition, the court has the power to determine a loan to be unfair (and, therefore, voidable) if the terms of the loan (specifically the interest and charges) could not be considered to be commercially reasonable (ie, they are extortionate). In practice, this provision has been seldom used, and the courts in Australia are reluctant to intervene unless the commercial terms greatly deviate from typical market terms taking into account the financial situation of the company.

A creditor-defeating disposition occurs where company property is transferred and the consideration payable at the time of the agreement (or, where there is no agreement, when the transfer occurred) was less than the market value (or the best price reasonably obtainable), with the effect of preventing, hindering or significantly delaying property becoming available for the benefit of creditors in the winding-up of the company.

A court may make a number of orders in respect of a voidable transaction, including orders directing a person to transfer the property that was the subject of the impugned transaction back to the company in liquidation and orders directing a person to pay to the company in liquidation an amount that fairly represents the benefit received under the impugned transaction.

Ipso facto stay provisions

An automatic stay applies on the enforcement of ipso facto clauses in certain contracts.

The automatic stay applies where one of the following insolvency events occurs in relation to a company:

1. voluntary administration;
2. a receiver or controller is appointed over the whole or substantially the whole of the company's assets;
3. the company announces, applies for or becomes subject to a scheme of arrangement to avoid a winding-up; and
4. the company is undergoing restructuring pursuant to the regime for companies with liabilities of not more than A$1 million.

The automatic stay does not apply to an agreement entered into before 1 July 2018 unless the agreement is subject to a variation, novation or assignment occurring after 1 July 2023. The automatic stay does not apply to all contractual defaults. For example, it does not apply if the company has failed to meet its payment or other performance obligations under the relevant agreement.

The length of the automatic stay depends on which formal insolvency process applies to the company as follows (subject to a court order extending the stay):

1. scheme of arrangement: the stay ends within three months of the announcement, or where an application is made within that three months, when the application is withdrawn or dismissed by the court or when the scheme ends or the company is wound up;
2. receivership or managing controllership: the stay ends when the receiver's or managing controller's control ends;
3. voluntary administration: the stay ends on the later of when the administration ends or the company is fully wound up; and
4. restructuring: the stay ends on the later of when the restructuring ends or the company is fully wound up.

Importantly, the automatic stay does not apply if a company executes a deed of company arrangement (DOCA). The automatic stay ends when the 'administration ends', that is when a DOCA is executed by the company and the deed administrator.

When the stay ends, termination or other rights that accrued before it ended are not re-enlivened. However, the company is no longer protected from its counterparty exercising rights that arise after the end of the stay.

Even though the automatic stay provisions came into operation from 1 July 2018, they have been the subject of little judicial consideration. The two principal cases in which it has been considered largely confirmed the stay provisions operate as expected (and as we have noted above).

The scope of the automatic stay, specifically what contract types, rights and self-executing provisions are excluded by the automatic stay, are set out in the legislation. Relevantly, syndicated loans (and derivatives) are excluded from the operation of the automatic stay, and rights under those contracts will remain available to the parties should a trigger event occur. Accordingly, the impact of these changes on acquisition financings (which contemplate a customary security package) has been minimal.

By contrast, bilateral facility agreements are not excluded under the relevant legislation and as such the automatic stay provisions generally apply. The Asia Pacific Loan Market Association has issued a recommended rider clause for lenders to include in bilateral facility agreements to assist a lender in accelerating the loan as against a guarantor of that facility where the borrower is subject to a relevant insolvency process. It is important to note that this right to accelerate the loan as against the guarantor will not operate where the guarantor itself is also the subject of a relevant insolvency process under the Corporations Act.

In addition, the automatic stay does not prevent secured creditors from appointing a receiver during the decision period pursuant to section 441A of the Corporations Act (if they have security over the whole or substantially the whole of the company's property), or enforcing security interests over perishable goods or prevent secured creditors or receivers from continuing enforcement action that commenced before the administration.

Priority of claims

Priority of claims on insolvency

Generally, unsecured claims in Australia will rank equally on a pari passu basis. Section 555 of the Corporations Act provides that, unless the Corporations Act provides otherwise, all debts and claims in a winding-up rank equally, and if the property of the company is insufficient to meet them in full, these claims will be paid proportionately.

There are a number of exceptions to this general proposition (section 556 of the Corporations Act), including:

1. expenses properly incurred by a liquidator or administrator in preserving or realising property of the company, or in carrying on the company's business (as well as other costs and amounts owed to them); and
2. certain employee entitlements.

Sitting outside this regime are secured creditors, who will have priority over unsecured creditors. The security granted in their favour will entitle them to priority for payment from the proceeds and realisations of assets subject to security interests. There are exceptions to this, including the exception that certain employee entitlements have a statutory priority to the proceeds of assets subject to a circulating security interest (formerly, a floating charge) on realisation by a receiver or liquidator to the extent that the non-circulating property of the company is insufficient to meet these priority amounts.

Subordination and the enforceability of intercreditor arrangements

Contractual subordination is a well-accepted tenet of secured lending in Australia; accordingly, intercreditor arrangements are commonly used in Australia to contractually clarify the relationship between two or more classes of creditor (including shareholder lenders and hedging counterparties).

Structural subordination is, however, less common (with a notable exception for holdco payment-in-kind instruments, which have been gaining popularity in recent times). Accordingly, second-lien structures can be accommodated relatively easily from a local perspective, where contractual subordination is typically documented via an offshore law-governed intercreditor arrangement.

Unlike that contained in the Loan Market Association suite of documents, there is currently no market standard form of intercreditor in Australia. A set of intercreditor principles (primarily applicable to leveraged transactions) has been circulated within the market, although they have not been universally adopted. Accordingly, a number of the provisions that these principles attempted to standardise (eg, drag rights, standstill periods, mezzanine information rights and release provisions) remain heavily negotiated.

Jurisdiction

Consent to jurisdiction

Australian courts will generally respect the submission of an Australian entity to the courts of another jurisdiction, provided the choice of jurisdiction was not entirely unconnected with the commercial realities of the proposed transaction (and that there are no public policy reasons to deny such a submission).

Enforceability of foreign judgments

In Australia, the enforcement of civil judgments obtained in foreign courts is generally covered by two regimes. The first is under the Foreign Judgments Act 1991 (Cth) (FJA), which applies to certain specified courts in prescribed jurisdictions. Where the relevant court is not prescribed by the FJA, the enforceability of the relevant judgment will be dealt with by common law principles.

The FJA provides a framework, based on registration, for civil judgments made in prescribed foreign courts to be enforceable in Australia. This regime applies to judgments made by specific courts in prescribed jurisdictions, for example, certain Swiss, French, Italian, German and UK courts. Under the FJA, a judgment creditor of a relevant foreign judgment may apply to an Australian court for that judgment to be registered any time within six years of the last judgment in the foreign court. The judgment may be registered if it is final and conclusive for a fixed sum of money (not being in respect of taxes, a fine or other penalty), and is enforceable by execution in the relevant foreign country. Registration gives the judgment the same force and effect as if the judgment originally had been given in the Australian registering court (subject to certain exceptions). Special rules are also applicable to the enforceability of New Zealand judgments. The registration may be set aside if the foreign court did not have the necessary jurisdiction over the judgment debtor, either because the judgment debtor did not reside or carry on business in the jurisdiction when the proceedings were brought or did not otherwise submit to the jurisdiction of the court.

However, in certain jurisdictions (such as the United States) where Australia does not have the benefit of a treaty that provides for the reciprocal recognition and enforcement of judgments in civil matters, there is no statutory recognition or statutory enforcement in Australia of any judgment obtained in a court in such a jurisdiction. Instead, a judgment made by a court of the relevant jurisdiction can only be enforced in Australia under the common law regime.

Under that regime, any final, conclusive and unsatisfied judgment of the relevant court that has the necessary jurisdiction over the judgment debtor that is in personam (ie, it imposes a personal obligation on the defendant) and is for a definite sum of money (not being a sum in respect of taxes or other charges of a like nature or in respect of a fine or other penalty) will be enforceable by the judgment creditor against the judgment debtor by action in the Australian courts (without re-examination of the merits of the issues determined by the proceedings in the relevant court). There are some exceptions, including where the proceedings involved a denial of the principles of natural justice, or the judgment was obtained by fraud or some other vitiating factor.

In seeking to enforce a foreign judgment under either regime, a practical difficulty often encountered if the foreign proceeding was not defended is proving that the foreign court has the necessary jurisdiction over the judgment debtor. Where the debtor is a corporation, the applicant will need to show that the debtor carried on business within the jurisdiction of the foreign court, either by maintaining a branch office or by employing an agent with the authority to bind the company and to conduct business there on its behalf.

In respect of recognition of foreign insolvency proceedings, Australia has enacted the UNCITRAL Model Law on Cross-Border Insolvency in the Cross-Border Insolvency Act 2008 (Cth). Australian courts recognise the jurisdiction of insolvency proceedings, including a foreign main proceeding in which a debtor's centre of main interests is located. Australian courts generally cooperate with foreign courts and insolvency practitioners.

Acquisitions of public companies

Restriction on acquiring more than 20 per cent

The Corporations Act restricts a person from acquiring a 'relevant interest' in issued voting securities in a listed Australian company, or an unlisted Australian company with more than 50 members, where this would cause that person's (or someone else's) 'voting power' to increase from below 20 per cent to above 20 per cent or from a starting point above 20 per cent and below 90 per cent.

There are exceptions to the above restrictions, including the two principal methods of acquiring control of an Australian publicly listed company: off-market takeover bids (Takeover Bids) and schemes of arrangement (Schemes).

Takeover bids

Overview

A Takeover Bid involves a bidder making offers to shareholders to acquire their securities for consideration. To make a Takeover Bid, a bidder prepares and sends a bidder's statement to target security holders outlining the terms of its offer. The target then responds by preparing and issuing a target's statement that includes the target board's recommendation and, where required, an independent expert's report as to whether the transaction is fair and reasonable. Shareholders then determine whether to accept the offer made to them, which must remain open for at least one month and no more than 12 months as determined by the bidder.

Unlike a Scheme, a Takeover Bid does not require the support of the target and can be made on a hostile or friendly basis.

Consideration

All offers under a Takeover Bid must be on the same terms and the consideration offered may be cash, listed or unlisted shares, or a combination of both. The Corporations Act restricts bidders from providing collateral benefits to induce acceptances or agreeing to escalation clauses. A bidder is also required to comply with the 'minimum bid price rule', requiring it to offer consideration that is equal to or greater than the highest consideration it or its associates have paid for securities in the four months before the Takeover Bid.

Conditionality

A Takeover Bid may be subject to any conditions the bidder chooses, other than conditions that are solely within the control of the bidder (or turn on the bidder's state of mind).

Typical conditions include:

1. the receipt of necessary regulatory approvals (eg, FIRB or ACCC approval);
2. no material adverse change in the target business;
3. no prescribed occurrences arising, such as payment of unauthorised dividends or changes to the capital structure of the target; and
4. no legal restraints or prohibitions arising.

In addition to the above, it is common for a Takeover Bid to also include a minimum acceptance condition, requiring a minimum number of acceptances to be received to ensure the bidder reaches a certain ownership threshold, usually 50 per cent (to achieve practical control) or 90 per cent (to proceed to compulsorily acquire the remaining 10 per cent). A bidder is prohibited from including a 'maximum acceptance condition'.

Financing certainty

The Corporations Act prohibits persons from making a Takeover Bid if they are unable, or are reckless as to whether they are able, to complete the Takeover Bid.

The Australian Takeovers Panel has separately indicated that it expects that a bidder has a reasonable basis to fund a Takeover Bid and, where the Takeover Bid is debt-funded, a bidder would have binding commitments from its lenders at the time of announcing its Takeover Bid and would not declare its bid unconditional unless it is highly confident that it can draw down on these facilities (ie, binding funding arrangements are documented in final form and commercially significant conditions precedent to drawdown have been satisfied or there is no material risk the conditions precedent will not be satisfied).

However, unlike other jurisdictions, such as the United Kingdom, there is no requirement to have these funding arrangements verified or for 'cash confirmations' to be provided by a financial adviser to the bidder.

Schemes

Overview

A Scheme is a statutory procedure under the Corporations Act that involves target shareholders agreeing to transfer or cancel their target securities in exchange for consideration offered by the bidder.

To commence a Scheme, a bidder and target will enter a scheme implementation deed (SID) that sets out the process for how the Scheme will be implemented, alongside other provisions agreed between the parties, such as conditions and deal exclusivity arrangements. A Scheme is typically implemented through the following steps:

1. After the SID is signed, the target will apply to a court to convene the shareholders meeting (known as the Scheme Meeting) for shareholders to vote on the Scheme. The target will also prepare the explanatory statement and notice of meeting (the Scheme Booklet) that will be dispatched to shareholders to inform them of the Scheme ahead of their vote at the Scheme Meeting. An independent expert's report is typically included in the Scheme Booklet.
2. The Scheme Meeting is held and must be approved by target shareholders (or each relevant class of shareholders) by both 75 per cent of the votes cast on the resolution and more than 50 per cent in number of the target shareholders voting on the resolution (in person or by proxy).
3. Once approved by shareholders, the court is then asked to approve the Scheme at a further hearing (known as the Second Court Hearing). If approved, the Scheme is then implemented by the bidder paying the consideration and receiving the target securities.

A Scheme is a target-led process, requiring the target to take several steps including applying to court, holding the Scheme Meeting and preparing the Scheme Booklet. For this reason, a Scheme is only viable in a friendly (and not hostile) situation.

The advantage of Schemes

Schemes are typically preferred to Takeover Bids where full ownership is important to the bidder, such as in public-to-private transactions. This is because it is typically easier to achieve 100 per cent ownership under a Scheme, since provided the voting thresholds described above are met, all shareholders (including those who dissent or do not vote) are bound to the Scheme. In comparison, to achieve 100 per cent ownership under a Takeover Bid, a bidder and its associates must have a relevant interest in 90 per cent of the target's securities to proceed to compulsory acquisition of the remaining shares (or 'squeeze out' the remaining shareholders), which usually requires a higher proportion of target shareholders to accept the Takeover Bid than to vote in favour of the Scheme.

A Scheme is also an 'all or nothing' proposition, meaning that if it is approved, 100 per cent of the securities will be acquired or, if not approved, no shares will be acquired. A Takeover Bid may require the bidder to waive its minimum acceptance condition in order to encourage acceptances to reach a 90 per cent relevant interest and proceed to compulsory acquisition.

However, a Scheme is only viable in a friendly (and not hostile) situation and may not be appropriate where the target register is such as to make meeting the voting thresholds challenging. Dual offer structures have also emerged in Australia to achieve certain outcomes. These often involve a bidder making a Scheme and Takeover Bid concurrently, with the Scheme at a higher price to the Takeover Bid to encourage target shareholders to support it (and avoid being faced with a Takeover Bid at a lower price that may lead the bidder to achieve practical control of the target).

Consideration

The consideration under a Scheme can include cash or listed or unlisted securities (stub equity) or a combination of the two. Unlike a Takeover Bid, it is not necessary for all offers under a Scheme to be on equal terms, which more easily facilitates differential treatment of security holders. However, where the same consideration (or choice of consideration) is not offered to all shareholders equally, or if those shareholders have materially different interests under the Scheme, this may result in the creation of classes of shareholders with each class being required to approve the Scheme to the thresholds noted above.

Schemes have increasingly been used by private equity bidders to offer stub equity as a method of having shareholders (or a select class of them, such as founders, managers or large shareholders) rollover a portion of their target shares into shares in the bidder.

Conditionality

A Scheme can be subject to similar conditions as to a Takeover Bid as those mentioned above.

Financing

A target will usually require the bidder to provide evidence (in the form of debt or equity commitment letters) of its ability to pay the scheme consideration before it will enter the SID and commence the Scheme process. On a practical level, this often results in bidders seeking 'certain funding' from their financiers (ie, binding commitments to provide financing subject only to the satisfaction of a limited set of conditions, the accuracy of certain material representations, the absence of major defaults and it still being lawful for the financiers to provide the facilities at the time of funding). It is not customary for a target to agree to any form of financing condition in a SID and it is common for a target to seek representations and warranties from the bidder to the effect that it has sufficient amounts to pay the Scheme consideration at all times from signing the SID until the Scheme is approved by the court.

As part of the court approval process, the bidder will be required to satisfy the court that it has sufficient funds to pay the Scheme consideration and consummate the transaction before the court will approve it. To remove execution risk for shareholders, it is common for a court to expect the SID (and related documentation) to require a bidder to fund any cash consideration into a trust account of the target no later than the business day before the shares are transferred to it on the implementation date.

Other uses of Schemes

Schemes can also be used to implement corporate restructures, demergers and debt-for-equity transactions. Specific to creditors' schemes of arrangement, on 3 May 2021, the federal government undertook a public consultation inquiry with industry on improving creditors' schemes of arrangement to better support businesses, including by introducing a moratorium on creditor enforcement while schemes are being negotiated. The consultation aimed to assess whether the current creditor scheme of arrangement process is useful as a means of restructuring insolvent companies. In its current form, the scheme of arrangement process is typically used in relation to complex restructurings of large corporate groups, involve a high level of court involvement and, unlike other insolvency processes (such as voluntary administration), there is no automatic moratorium to prevent creditors from bringing claims against the company during the negotiation and formation of the scheme. The consultation also sought input on the efficacy of the current scheme of arrangement framework generally.

Outlook and conclusions

The outlook for Australian acquisition and leveraged finance over the coming year is constructive. Although global political and economic uncertainty persists, market sentiment towards Australia remains positive as dealmakers recognise Australia has attractive features such as legal certainty, robust regulatory frameworks and dynamic industries. Despite the macroeconomic headwinds, the Reserve Bank of Australia has observed that business funding remains readily available, supported by low risk premia, favourable bank funding conditions and strong competition among bank and non-bank lenders.

The successful syndication of several large acquisition financings during 2026 illustrates this. As such, borrowers with resilient earnings, credible businesses and appropriate leverage should continue to attract competitive financing from multiple sources.

The prospective sponsor exit pipeline provides a further reason for optimism. The increase in sponsor exit activity during the first half of 2026 was an encouraging sign after an extended period in which deployment materially outpaced realisations. Several substantial assets are also the subject of reported sale processes, including Blue Owl-backed STACK Infrastructure's Asia-Pacific data centre business, reportedly valued at more than A$25 billion, KKR and Commonwealth Bank's A$5 billion-plus process for Colonial First State, and Blackstone's proposed A$1 billion-plus exit from clinical trials provider Nucleus Network. Not every process will reach completion, and timing may shift, but the breadth of the pipeline across digital infrastructure, financial services and healthcare is significant and encouraging. Successful exits would recycle sponsor capital and generate acquisition financing, refinancing and follow-on capital expenditure opportunities.

The diversity of available financing should remain one of the Australian market's principal strengths. Domestic and international banks have demonstrated their ability to underwrite and distribute large syndicated facilities, while institutional term loan B and private credit markets provide alternative execution routes and can increasingly form part of the same capital structure. Sponsors should therefore continue to benefit from running bank and private credit solutions in parallel, allowing them to balance price, leverage, flexibility and certainty of execution. Competition between these sources may also support further convergence in documentation and terms, particularly for larger and better-rated credits. Sponsors are likely to continue importing global precedents into Australian transactions, with banks becoming more flexible on terms to remain competitive.

Private credit should remain an important source of financing, although its next phase is likely to be more selective and institutionalised. Credit deterioration in some portfolios and tighter liquidity will test managers, while ASIC's focus on valuation, governance, conflicts and disclosure will further differentiate the field. Better-capitalised managers with strong origination, underwriting and portfolio-management capabilities should remain well placed to provide acquisition, refinancing and growth capital, including unitranche, holdco, asset-backed and other bespoke solutions. Higher valuation and investor-reporting standards should ultimately strengthen confidence in the sector.

Digital infrastructure and AI-related investment should continue to drive financing demand, alongside energy and grid investment, critical minerals, transport, logistics and financial services. These sectors combine substantial capital needs with structural demand and, often, resilient or contracted earnings. As transaction sizes increase, bank, institutional and private capital are likely to be combined more frequently. Other sectors that may see elevated deal volumes are healthcare and industrials, while real estate lending is expected to remain heavily reliant on private credit, with pricing reflecting underlying project risk.

Meaningful risks remain, including persistent inflation, geopolitical uncertainty, valuation gaps and pockets of credit stress. Nevertheless, Australia enters the next phase with significant advantages, including a stable legal system, substantial domestic and international capital, active corporate and sponsor buyers and a diverse financing ecosystem. Overall, the developing exit pipeline, strong lender competition and continuing investment demand support a positive outlook for Australian acquisition and leveraged finance. The mandatory ACCC merger regime will remain an important execution consideration, but early experience suggests it is proving manageable for well-prepared parties. The ACCC has met its decision-timing commitments for most acquisitions, although complex matters require additional pre-notification work and cost. Sponsors will nevertheless need to start competition analysis earlier and coordinate regulatory timetables with financing milestones (including facility availability, longstop dates, commitment extensions, ticking fees, syndication and flex rights).

Acknowledgements

The authors would like to thank Nick Cooper, Deborah Johns, Julian Cheng, Anna Schwartz, Hanh Chau, Sean Meehan, Tom Gardner, Anthony Whitaker, Laura Scro, Jason Yu, Phyllis He and Henry Jamieson for their assistance with the preparation of this chapter.

Endnotes

1. Mergermarket: "Australian M&A holds firm in 1H26 despite shelved mega-deals – Dealspeak APAC", 2 July 2026.
2. Ibid.
3. Ibid.
4. ASIC: "ASIC puts private credit on notice, ahead of 30 June valuations and reporting", 18 June 2026.
5. Mergermarket: "APAC (ex-Japan) 1H26 loan volume falls 10.2% YoY to US$157bn; Australian deals fuel M&A comeback – Legal Advisor Rankings", 6 August 2026.
6. Mergermarket: "AirTrunk USD 2.325bn loan commitments funding development of new Malaysian data centre due 22 May", 27 April 2026.
7. ATO: "Build to rent development tax incentives", 18 February 2026.
8. An "ipso facto clause" is a contractual clause that allows one party to enforce a contractual right, or terminate a contract, upon the occurrence of a particular event, usually upon insolvency or a formal insolvency appointment (eg, the appointment of a voluntary administrator).
9. See sections 415D(2)–(3), 434J(2)–(3), 451E(2)–(3) and 454N(2)–(3) of the Corporations Act 2001 (Cth).
10. Rathner, Citius Property Pty Ltd (Administrators Appointed) [2023] FCA 26 and Okami SA Newton Pty Ltd v Newton SC Pty Ltd [2024] SASC 151.
11. These are contained in the Corporations (Stay on Enforcing Certain Rights) Regulations 2018 (the Regulations) and the Corporations (Stay on Enforcing Certain Rights) Declaration 2018 (the Declaration). The Regulations prescribe 42 types of contracts, agreements or arrangements that are excluded from the operation of the automatic stay, and rights in those kinds of arrangements remain available to the parties to those arrangements should a trigger event occur. The agreement types listed under the Regulations include: contracts, agreements or arrangements that are a licence or permit issued by federal, state or local government; contracts, agreements or arrangements that are or are directly connected with derivatives and securities financing transactions; contracts, agreements or arrangements for the underwriting of an issue or sale of, or under which a party is or may be liable to subscribe for securities, financial products, bonds, promissory notes or syndicated loans; and contracts, agreements or arrangements that are or govern securities, financial products, bonds, promissory notes or syndicated loans. The Declaration declares 11 kinds of rights (including self-executing clauses that, when executed, provide those rights) as excluded from the operation of the automatic stay, and those rights remain available to the parties should a trigger event occur. By way of illustration only, the kinds of rights excluded by the Declaration include, but are not limited to a right: to terminate under a standstill or forbearance arrangement; to change the priority in which amounts are to be paid under a contract, agreement or arrangement; and of set off, combination of accounts or to net balances or other amounts.
12. The meaning of "relevant interest" is contained in sections 608 and 609 of the Corporations Act, and includes being the holder of securities or having the power to exercise (or control the exercise) of a right to vote or dispose of securities.
13. These restrictions also apply to managed investment schemes.
14. The meaning of "voting power" is contained in section 610 of the Corporations Act and broadly means the proportion of voting securities held by a person and its associates as percentage of the total voting securities of the entity. A number of people may be taken to be associates for this purpose as defined in section 12 of the Corporations Act. This includes certain entities controlled by one person, two or more persons who enter into a relevant agreement for the purpose of controlling or influencing the composition of the entity or two or more persons who are acting or proposing to act in concert in relation to the entity's affairs. ASIC has also issued regulatory guidance on explaining these concepts, see Regulatory Guide 5: Relevant interests and substantial holding notices, dated August 2020.
15. This chapter only discusses off-market takeover bids. A takeover bid can also be made "on-market" through a broker but this is comparatively uncommon because it requires the consideration to be 100% cash and cannot be subject to any conditions.
16. Technically, this report is only required where the bidder has voting power in the target of 30% or more or where the bidder and target have mutual directors. Further information on the meaning of fairness and reasonableness in this context is set out in ASIC Regulatory Guide 111: content of expert reports dated October 2022.
17. Technically, this report is only required where the bidder has voting power in the target of 30% or more or where the bidder and target have mutual directors. Further information on the meaning of fairness and reasonableness in this context is set out in ASIC Regulatory Guide 111: content of expert reports dated October 2022.
18. An escalation clause refers to an arrangement where a bidder agrees to acquire a relevant interest in securities within six months before the Takeover Bid on terms that include the giving of a benefit that is attributable or determinable based on the amount or value of consideration under the Takeover Bid. An example would be where a bidder acquires shares and agrees to "escalate" the consideration for those shares up to the higher consideration under a subsequently made Takeover Bid.
19. Australian Takeovers Panel, "Guidance Note 14 – Funding arrangements".
20. Most Schemes proceed by way of a transfer of securities to a bidder rather than through the cancellation of shares.
21. Separate classes of shareholders may exist where the rights and entitlements of shareholders are so dissimilar as to make it impossible for them to consult together with a view to their common interests. A separate class may be created by a court as part of its review of the Scheme. This topic is beyond the scope of this chapter.
22. Importantly, these thresholds are based on the votes cast at the Scheme Meeting (in person or by proxy) and not on the total issued share capital.
23. RBA: "Statement of Monetary Policy – August 2026".
24. Mergermarket: "Australian M&A holds firm in 1H26 despite shelved mega-deals", 2 July 2026.
25. ASIC: "ASIC puts private credit on notice, ahead of 30 June valuations and reporting", 18 June 2026.
26. ACCC: "New merger control regime off to positive start", 9 April 2026.