Macquarie Capital
Chart source: FactSet, ‘Total return indices performance 2025YTD’, data as at 26 November 2025.
Following ‘Liberation Day’ declines, global equity markets are now at all-time highs in 2025, with the Hang Seng performing particularly strongly up approximately 34 per cent.1 Across developed markets, price-to-earnings multiples reached historic peaks with the NASDAQ maintaining a commanding premium underpinned by the persistent AI growth narrative.
Globally, equity issuance has surpassed 2024 with volumes rebounding 15 per cent year-over-year as growth funding and IPOs return to focus.2 Asia has been a particular standout, where a resurgence in listing activity has been headlined by landmark transactions including Zijin Gold’s record-breaking $HK28.7 billion (~$US3.7 billion) IPO and the dual-primary listing of autonomous mobility leader Pony.ai. In addition to this activity in Asia, the $US1.5 billion CoreWeave IPO was a notable US transaction. Macquarie Capital was pleased to support on all three transactions.
Index and quant funds now account for 40 per cent of institutional ownership on the ASX, more than doubling since 2009. This structural shift is impacting trading patterns including increasing share price volatility, with 45 per cent of ASX200 companies experiencing share price moves of more than 5 per cent on their 2025 results announcement day,3 as well as lower register turnover and asymmetrical benefits for large caps. As passive ownership rises, it is increasingly important for corporates to proactively manage consensus expectations given the significant market reactions to earnings ‘misses’ or ‘beats’ and to understand specific quantitative factors driving investment decisions.
Debt fundamentals remain resilient and supportive of activity, driven by abundant liquidity and healthy investor demand across the risk spectrum. Consequently, 2025 institutional activity has been heavily focused on refinancing and repricing existing debt. Credit spreads are hovering near historic lows, with high-yield spreads at around 330 bps, borrowers are capitalising on this environment to secure tight margins well below long-term averages.4
Global M&A transaction value increased significantly recording the highest level in 4 years, with deals of more than $A5 billion driving over 50 per cent of value. Australia and New Zealand have seen an uptick in mid-cap to small-large-cap transactions of $A2-5 billion, however the lack of larger deals in the region has kept M&A transaction value in line with 2024, with one month remaining, and the 10-year average.5
Australia remains an attractive investment destination, with net capital inflows from M&A growing, despite Australia’s comparatively large and diverse private capital pool. We saw a significant step up in inbound M&A this year from the Americas and the broader APAC region reflecting strategic interest in Australia’s robust market fundamentals.”
John Farnik
Head of Industrials, Australia and New Zealand
Macquarie Capital
Chart source: Dealogic. Data as at 26 November 2025. †10-yr median calculated between 2015-2024. *2021 M&A value adjusted to remove BHP unification (~$A84b).
Chart source: Dealogic. Data as at 26 November 2025. †10-yr median calculated between 2015-2024. *2021 M&A value adjusted to remove BHP unification (~$A84b).
Rising geopolitical tensions, evolving security threats and positive fundamentals are prompting increased activity in sectors related to defence, energy security and critical minerals, as organisations and governments seek to strengthen resilience and adapt to changing global dynamics.
Chart source: Company disclosures, government announcements and industry news channels. Note: All figures shown in $US, with $A denominated amounts converted to $US assuming AUDUSD of 0.65. Note: Critical minerals include rare earths, graphite, tungsten, antimony and lithium.
As governments bolster resilience and electrification accelerates, we are seeing structural disruption in commodity markets - characterised by persistent supply deficits in copper and a decoupling of gold from monetary policy - that is catalysing activity and unlocking opportunities across the renewables and critical infrastructure landscape.”
Russell Keating
Global Head of Critical Minerals & Energy
Macquarie Capital
Increasing US big-tech CapEx
US big-tech CapEx has increased exponentially since the release of ChatGPT and now is a key driver of US GDP growth. AI has the potential of transforming many sectors in the economy although the scale and speed of AI investment has intensified the ‘boom vs. bubble’ debate.
Chart source: Macquarie, seasonally adjusted, quarterly annualised. Includes Google, Meta, Amazon, Microsoft, Tesla, Apple, Nvidia, Oracle, Broadcom, and IBM.
Adjacent opportunities arising across the AI value chain
As AI adoption increases, data centres are demanding significantly more power, making access to powered land a critical bottleneck. This surge is driving competition between hyperscalers and other players, who are pursuing innovative M&A and partnership strategies to achieve vertical or horizontal integration. Skilled labour shortages are further fuelling services growth, as well as investment and implementation of robotics.
The accelerated adoption of AI, coupled with productivity pressures and significant CapEx reinvestment by big-tech, is fundamentally reshaping the M&A landscape - driving a new wave of capability-driven consolidation and unlocking strategic investment opportunities across adjacent industries.”
Michael Milne
Head of Technology, Media, Entertainment and Telecommunications, Asia-Pacific and Head of Government Advisory, Australia and New Zealand
Macquarie Capital
The acceleration of the electrification of industries requires a significant amount of capital, therefore driving investment opportunity. For example, the recent announced sale of OPTrust and Foresight Group’s combined ~70 per cent equity stake in Kinetic Group to TPG, which Macquarie Capital advised on. The transaction facilitates the company’s transition to zero emission transport and is set to accelerate the electrification of its fleet towards its commitment of a fully zero-emission urban bus fleet by 2035.8
Private capital played an important role in the rebound of M&A activity this year as financial sponsors capitalised on improving market liquidity and sentiment. Global sponsor activity was focused on deploying substantial levels of dry powder on larger, high-quality opportunities. Sponsors continued to use a variety of levers to drive return on capital, including continuation funds, and we saw a notable uptick in exit activity, including sponsor-backed IPO exits. This led to a market defined by strong overall deal value, while the total number of transactions reflected a more disciplined and selective environment.
Concurrently, the definition of ‘infrastructure’ is undergoing a structural expansion; funds are increasingly pivoting beyond traditional regulated utilities and transport toward ‘core-plus’ strategies to capture higher risk-adjusted returns. This shift is exemplified by KKR’s acquisition of ProTen, one of Australia’s largest agricultural infrastructure businesses, demonstrating how major sponsors are redefining the asset class to include critical supply chain and agribusiness platforms.
The definition of what is ‘essential’ has evolved dramatically. Ten years ago, it meant power grids and pipelines. Today, it’s the digital backbone of the economy, the resilience of global supply chains and the security of food systems.”
Joanne Spillane
Global Head of Private Capital Markets
Macquarie Capital
Chart source: Dealogic, Preqin. Data as at 26 November 2025
A stabilising interest rate environment, coupled with resilient global equity markets, is creating a favourable backdrop for a continued resurgence in M&A activity. However, market dynamics remain sensitive to persistent inflationary pressures, geopolitical risks and a potential correction from elevated valuations.
The ‘boom vs. bubble’ debate will continue as AI’s transformative potential and elevated valuations depend on delivering tangible returns. Realising these benefits hinges on organisations creating the right environment for effective adoption and integration.
Private capital is broadening its investment remit to deploy dry powder. Australia remains an attractive investment destination and is expected to continue seeing net capital inflows. The increasing passive ownership of the ASX will continue to influence trading activity and may encourage further M&A activity for small caps.
These insights were drawn from Macquarie Capital’s 2025 Vantage presentation. If you are interested in receiving a copy, please send a request below.
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