Transport M&A activity on track to steam past 2015 record, with more than £52bn of deals expected to complete
Mergers and acquisitions (M&A) activity in the transport sector is set to increase this year, with more than £52bn of deals expected to go through.
Completed deals rose for the third consecutive year in 2015 to a total of £48bn. Further transactions worth around £66bn were announced, with the sector hitting record levels.
KPMG's latest Transport Tracker report predicts 2016 will see completed deals “significantly exceed” £52bn in value.
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The prediction comes despite global M&A activity across all sectors dipping so far this year after a record 2015. In the first quarter of this year, M&A volume totalled $749.8bn – down 20 per cent year on year, according to Dealogic.
James Stamp, UK head of transport at KPMG, said the continued strong performance in transport investment would be "driven by the search for growth; changes in demographics and supply chain; evolution of business models; increased focus on customer proposition, and changes to the regulatory environment”.
He added: “With interest rates remaining low, returns on asset acquisitions remain attractive. We expect that further investments this year will see transactions to significantly exceed £52bn on the basis of announced transactions alone."
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KPMG noted that M&A activity in the airline sector remained “relatively low” in 2015, with £3.1bn of completed transactions recorded. It said this was primarily due to “foreign ownership restrictions and regulation”.
But the report said airlines are expected to continue to evolve their “business models and levels of co-operation towards alliancing and partnership to optimise their network, provide increase passenger choice, and pursue growth”.
The Transport Tracker pointed to the example of the 2016 alliance between International Airlines Group and LATAM Airlines Group.