Expert says more ASX shares to follow Sydney Airport (ASX:SYD) takeover trend

An expert is predicting that we will see more ASX shares taken private following the big premium offered for Sydney Airport shares.

| More on:
Santos Oil Search ASX share price movements represented by street signs stating mergers and acquisitions bluescope share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

sdf

The stellar surge in the Sydney Airport Holdings Pty Ltd (ASX: SYD) share price on a takeover bid is only the start of a trend on our markets.

Many more ASX shares will also be taken private, according to the chief executive of Hamilton Lane, Mario Giannini.

The Australian Financial Review quoted the fund manager as saying that there is too much money in private capital markets chasing too few assets.

More ASX shares to be taken private through M&A

That means more publicly listed ASX shares will get privatised. Our share market is sounding like the property market where there are too many buyers chasing too few listings.

The Sydney Aviation Alliance consortium lobbed a $8.25 a share bid for the nation's largest airport, which is a 43% premium to the Sydney Airport share price.

The consortium is made up of infrastructure investors and superfunds. Thanks to cheap money from record low rates and stimulus, "patient capital" is looking for long-term productive assets.

Other ASX shares that been bolstered by M&A

We've already seen a number of merger and acquisitions (M&A) hitting our bourse. The Telstra Corporation Ltd (ASX: TLS) share price is one of the more recent examples. The telco sold a 49% stake in its mobile towers for $2.8 billion to an eager infrastructure consortium.

Let's also not forget that the Altium Limited (ASX: ALU) share price and Vocus Group Ltd (ASX: VOC) share prices have also been touched by the M&A bug. These are only a few examples of ASX shares under the M&A spotlight.

Why more ASX shares could be taken private

Hamilton Lane outlined a few reasons why its betting on a public-to-private shift. Giannini believes private companies can respond more quickly to black swan events. That's a handy skill, as the COVID-19 pandemic showed us.

He also pointed out that managers of a private company tend to own a larger share of the business. This aligns their interests to that of investors.

Further, private company investors are willing to cough up more for assets. This is because they can focus on long-term growth and not be distracted by a gyrating ASX share price.

Public listings losing its flavour?

Giannini also noted that listed companies are falling out of favour. The number of public listings has halved in the United States over the past decade.

"In the private sphere, everybody involved – the owners and the managers – all have a real stake in the outcome, and they can take actions quickly, and it matters to them," he was quoted by the AFR.

"I think the problem in the public sphere is you have owners in the form of pension funds and institutions who are not really active. They're sort of these passive investors, and you have management that generally doesn't own a huge amount of the company that are making decisions.

"It's a governance model that isn't as effective, I think, as the private model."

Regardless of whether the public-to-private trend accelerates, M&A is likely to be a big feature among ASX shares in 2021.

Motley Fool contributor Brendon Lau owns shares of Telstra Corporation Ltd. Connect with me on Twitter @brenlau.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Altium. The Motley Fool Australia owns shares of and has recommended Altium and Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Mergers & Acquisitions

Contented looking man leans back in his chair at his desk and smiles.
Mergers & Acquisitions

Guess which ASX 300 stock is jumping 7% on merger news

This struggling company could be close to merging with a rival.

Read more »

Man with rocket wings which have flames coming out of them.
Mergers & Acquisitions

Guess which ASX stock is up 50% on takeover offer

A takeover offer is getting investors excited this morning. Let's dig deeper into things.

Read more »

An oil worker in front of a pumpjack using a tablet PC.
Energy Shares

Santos shares rocket on $30b takeover offer

This energy giant could be going private after receiving a takeover approach.

Read more »

a woman drawing image on wall of big fish about to eat a small fish
Mergers & Acquisitions

Guess which ASX 300 share just received a takeover offer

This share is jumping today after receiving a takeover offer.

Read more »

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Mergers & Acquisitions

Johns Lyng Group shares enter trading halt. Is it a takeover target?

This ASX 200 stock looks ripe for a takeover.

Read more »

Group of people in a gym high five each other surrounded by gym equipment.
Mergers & Acquisitions

This ASX tech stock is hitting a record high on acquisition news

The market is responding positively to this news. Let's dig deeper into it.

Read more »

Two people shaking hands in the boardroom on a merger.
Mergers & Acquisitions

What did Macquarie make of the Brickworks and Soul Patts merger?

Macquarie sees simplification, scale, and upside… but it also has a warning..

Read more »

A cool young man walking in a laneway holding a takeaway coffee in one hand and his phone in the other reacts with surprise as he reads the latest news on his mobile phone
Mergers & Acquisitions

PointsBet share price surges 11% on improved takeover offer

The bidding war for PointsBet shares continues apace today.

Read more »