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The Australian M&A Outlook: Financial Services Industry Insights

A buoyant market with many more deals bubbling up

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With another wave of deals coming this year, our Australian M&A Outlook: Financial Services reveals what’s brewing beneath the surface. While incumbents will be hunting for growth, scale and capability, and private equity firms will explore various sub sectors of financial services, there may be macroeconomic storms ahead. 

To succeed in these conditions, dealmakers, more than ever, will need clarity on their strategic priorities to allow them to act decisively when opportunities arise. Below, we pinpoint the trends and sub-sectors to watch out for.


Current landscape 

Stepping back to look at the prevailing market conditions in financial services, we see several trends that will shape deals in 2022.

Appetite for growth remains high

After a period of shedding non-core businesses, incumbents in the financial services sector are now hungry for growth. Divestments and capital raisings have given them relatively strong balance sheets, so they have the funds and appetite to invest for growth.

Capability needs are driving deals

New market entrants have disrupted long-established incumbents, who have been somewhat held back by legacy technology and platforms which are less competitive as well as being expensive to update. Many incumbents are therefore searching for deals to acquire technology and digital capability (particularly in light of current skills shortages), and to improve customer experience.

Incumbents searching for scale

Regulatory change has been a seismic disruptor for incumbents; increasing compliance requirements and altering revenue and cost models. To improve their return profiles, incumbents in certain sub-sectors will pursue deals that deliver the scale required to survive and thrive.

Private equity actively participating

Private equity firms are now invested in various sub-sectors in financial services, particularly those that are not prudentially regulated (e.g. wealth, insurance distribution, non-bank lending). Further market activity is likely as seasoned investments reach their time horizon and newer investments hunt for growth opportunities.

Market outlook for 2022

When we ‘zoom in’ on sub-sectors of financial services, several specific areas of opportunity are visible.


Mandatory superannuation sets Australia apart from many overseas markets, which is guaranteed to attract interest among acquirers from other jurisdictions. For the past few years, Australia's superannuation industry has caught investor attention in all parts of the wealth value chain – including superannuation funds themselves, investment/wrap platforms, fund managers, and service providers to the industry. 

With ANZ, CBA and NAB having already done deals for their wealth businesses, Westpac's sale processes for Panorama and the BT Super business will be the key deals to watch this year. 

There has also been a steady stream of activity with alternative asset managers. This is set to continue, driven by managers wanting to build capability to attract the growing capital pools seeking access to alternative asset classes (real assets, infrastructure, ESG, etc.). 

In the wake of recent mega-mergers (e.g. SunSuper and QSuper), we expect to see industry super funds continue their consolidation journey. Heightened regulatory monitoring (e.g. product heatmaps, annual performance tests) also continues to put pressure on funds which are underperforming or have other sustainability challenges to find long-term solutions for their members, rather than 'merger of equals' transactions which may not achieve sufficient scale.

Buy now pay later

Several BNPL players now operate (and are listed) in the Australian market, but few have sufficient scale to turn a profit (many are still capital hungry as a result, as they continue to invest to reach profit maturity). The likely consequence of that will be market consolidation. 

Block’s acquisition of Afterpay was one of the mega deals of 2021 and this understandably dominated the business pages. Since then, Latitude has announced a bid for Humm’s consumer/BNPL business, and Zip has announced a bid for Sezzle. 

In the past 12 months, share prices of listed players have declined substantially (even relative to the broader tech sector) – a result of slowing growth, increasing competition, the perpetual threat of regulatory change, and the prospect of rising interest rates (which will not only increase funding costs, but also heighten customer credit risk). These depressed share prices make it harder for boards to justify raising capital (given the dilutionary impacts), adding momentum for strategic mergers that will improve scale (across geographies and market segments) which in turn enhances participants’ ability to attract further capital to survive and thrive.

Commercial finance and leasing

Whilst the major banks have recently been doubling down on their corporate / business banking businesses, various non-bank challengers have found opportunities to carve out market share through targeted plays, be they technology or relationship led. With a number of commercial finance businesses now under private equity ownership, we expect the proliferation of non-bank challengers (coupled with some potentially orphaned/non-core businesses) to prompt a flurry of M&A activity in the SME lending space.  

The fleet leasing sector also continues to be ripe for M&A, particularly after SG Fleet's acquisition of LeasePlan last year (that deal gave SG Fleet diversity in its business model and improved its scale). Many thought this would spark a raft of deals involving other major players, but pandemic-related supply chain issues (which have benefited residual value performance) seem to have temporarily delayed further merger activity. We expect mergers to be back on boards’ agendas in 2022 to shore up scale and longer term-performance.


Insurance dealmaking is accelerating globally and Australia is no exception. There was a flurry of activity last year with the sale of CBA's general insurance business to Hollard, the sale of Westpac's general insurance business to Allianz, and the speculated sale of another general insurance business. This activity was preceded by the major banks' exit from life insurance, the last of which was Westpac's transaction with TAL. 

Where to next? Over the past two years, private equity has invested in insurance distribution and with existing listed players also hungry for growth (e.g. Steadfast's acquisition of Coverforce), we expect no shortage of consolidation and bolt-on activity in 2022.

Big 4 banks

After a number of years focusing on simplification and reducing internal complexity, the big 4 banks are under pressure for growth, particularly as their traditional businesses continue to be highly contested, not only by their big 4 peers, but by a growing plethora of challengers. With their extensive divestment programs now largely complete, the big 4 banks have started to actively assess and pursue M&A opportunities to accelerate growth and capabilities - growth focused on market share, revenue diversity and new market segments, and capability focused on technology and digital competence (including people).

In line with what we’re seeing overseas, we expect to see deals across the full spectrum this year; from smaller tech/digital capability and product specific deals to larger, more opportunistic core banking deals, where sellers decide that a segment of their portfolio or their Australian operations are non-core.


What's next for dealmakers?


Given continuing uncertainty from the global COVID-19 pandemic, macroeconomic headwinds such as inflation and rising interest rates, as well as geopolitical instability, it will be critical for boards and dealmakers to continually assess their strategic priorities to ensure they are durable. 

As we believe that there will be no shortage of M&A opportunities in financial services, successful dealmakers will be those with high conviction in their strategic priorities. This, in turn, will allow them to act decisively to seize M&A opportunities (that are aligned to their strategic priorities). 

In addition to traditional M&A, we also believe that boards and dealmakers will need to consider partnerships and alliances to further their strategic priorities. Given the ever-evolving nature of our financial ecosystems, traditional M&A may not be the best approach for each situation, so being open to alternative structures (and having the capability to drive and support these post deal) will be key to success.

Explore our national findings plus other industry insights as part of this series.

National findings
Deals market ripe with opportunities and buzzing with activity
With competition and capital both high, buyers are thinking outside the box
Busy year for dealmakers with capital, competition, and valuations all high
Energy, Utilities and Resources
ESG is prompting companies and investors to nail their colours to the mast
Retail and Consumer
Revealed: Australia’s retail and consumer trends that dealmakers need to know
Technology, Media and Telecommunications
How dealmakers can capitalise on Australia’s red-hot TMT sector

National findings

In 2021, Australia was a hive of M&A activity across most market sectors. The buzz is continuing in 2022, driven by growth ambitions and access to capital, although geopolitical tensions and possible interest rate rises may temper valuation expectations among bidders.

Find out more


Following a record year for deals (in terms of volume and value), this year’s Australian M&A Outlook: Health suggests another flurry of deals will be struck in the healthcare services sector. This is underpinned by increased competition for transactions, new sponsors, available capital, and strong valuations.

Find out more

Energy, Utilities and Resources

This year’s Australian M&A Outlook: Energy, Utilities & Resources (EU&R) underlines just how important environmental, social and governance (ESG) performance has become to both buyers and sellers. More than ever before, ESG is driving deals activity across the EU&R sector (in Australia and overseas). In fact, the global push towards decarbonisation has made ESG the leading factor when determining, protecting, and creating value in many EU&R deals.

Find out more


This year’s Australian M&A Outlook: Infrastructure signals another busy year ahead.  While traditional government privatisation (or ‘capital recycling’) deals remain thin on the ground, funds still have capital to deploy, so more creative transactions and ‘Core Plus’ strategies will dominate. For buyers, that means thinking outside the box.

Find out more

Technology, Media and Telecommunication

Australia’s Technology, Media and Telecommunications (TMT) sector has had its hottest year in deals in a decade, with M&A activity hitting a ten-year high in 2022. This year's Australian M&A Outlook: TMT signals dealmakers are seizing opportunities as the three key trends driving deals – demand for data, digital transformation, and a re-evaluation of traditional asset ownership strategies – remain dominant this year.

Find out more

Retail and Consumer

With consumer sentiment still in the recovery phase, this year’s Australian M&A Outlook: Retail & Consumer pinpoints the sub-sectors and trends for dealmakers to watch. In 2022, retail and consumer M&A activity has been somewhat tempered by inflationary pressure (which is likely to push interest rates up faster than expected), ongoing supply chain issues, recent floods in NSW and Queensland, and geopolitical tensions. And while the federal budget provided some short-term economic stimulus, this won’t fundamentally alter the deals landscape.

Find out more

Contact us

Iain Tan

Iain Tan

Financial Services Deals Leader, PwC Australia

Hansjoerg Knieling

Hansjoerg Knieling

Partner, PwC Australia

Brendan Ayre

Brendan Ayre

Financial Services Deals Director, PwC Australia