Monday marked a significant day for the Australian Securities Exchange, with four major companies confirming takeover bids totalling billions of dollars, intensifying concerns over the shrinking local bourse. Waste management giant Cleanaway, which handles solid waste collection, recycling, and disposal services, agreed to a $9.4 billion takeover by Swedish private equity firm EQT. Concurrently, plumbing supplies company Reliance Worldwide, a manufacturer of water control systems and plumbing solutions, confirmed it would fall to a $4.1 billion bid from Canadian giant Brookfield.
Further reshaping the market, Japanese insurance giant Daiichi Life, which trades under the TAL brand in Australia, moved to acquire the remaining stake in local annuities giant Challenger for $7.8 billion. Challenger is a financial services company that offers annuities, which are products providing a regular income stream, primarily for retirement. Lastly, salary packaging group Fleet Partners agreed to a $1.1 billion sale to local private equity firm Pacific Equity Partners. These transactions follow a trend of quality companies departing the ASX, often into the hands of a smaller group of large, frequently foreign, investors. This phenomenon raises questions about the accessibility of the market for ordinary Australian investors and its vital role in wealth creation and funding future dynamic companies.
In response to this trend, veteran dealmaker and investor John Wylie of Tanarra Capital has proposed a raft of changes to reinvigorate the ASX. His suggestions include allowing “light touch” listings for smaller companies, simplifying corporate governance guidelines, and adjusting the performance test for super funds to encourage broader investment. Wylie also advocates for considering dual-class share structures to attract technology and growth companies, along with reforms to director pay and market integrity. While some proposals, such as rolling back climate reporting or allowing dual-class shares, are expected to spark debate, Wylie argues that a willingness to embrace change and compromise is essential to reverse the declining number of listed companies.
