Capital Calls: 3G gets back to basics 31 Dec 2021 Concise views on global finance: The buyout firm’s latest acquisition of Dutch window-shade maker Hunter Douglas at a $7.1 billion valuation is outside its traditional food and drink focus, but fits the cost-cutting and M&A playbook.
Review: A cautionary tale of bad climate investing 31 Dec 2021 “Don’t Look Up” has several flaws. But the satire about a giant comet heading for earth makes heroes of scientists, wallops politicians and the media and is often funny. Its warning not to put faith in flashy moonshots is also spot-on for companies grappling with global warming.
M&A deluge will give way to a steady shower 31 Dec 2021 Rainmakers arranged a record $5.8 trillion of deals in 2021, up 64% year-on-year, according to Refinitiv. Next year will be quieter as antitrust pressure keeps mega-mergers in check. But corporate breakups and cash-rich buyout firms should ensure bankers remain busier than usual.
Companies will take breakup pitch too far in 2022 31 Dec 2021 Now that General Electric and J&J are splitting up, bankers will recycle the book for tech, energy and car firms. Many have outgrown the conglomerate model. But those trying to transition their businesses have financial and operational overlap that is important to retain.
What our columnists got right and wrong in 2021 31 Dec 2021 We look back at a year as unpredictable as its predecessor. We foresaw an M&A surge, even if some of the deals we called for, like Tesla buying Daimler, failed to materialize. But we nailed a few biggies, like Grab’s moment in the limelight, inflation’s return and mRNA’s success.
Not all merger boutiques will be equal in 2022 30 Dec 2021 The crackdown on big deals will put a crimp on fees for shops that advise large companies, like PJT or Goldman. The most successful ones will be those that focus on transactions worth less than $1 billion, like Moelis, or big private equity. Houlihan Lokey tops that list.
Breakingviews readers’ top picks for 2021 30 Dec 2021 As a second pandemic year unfolded, subscribers clicked most on views about deals, including AT&T’s spinoff of DirecTV. Refinitiv readers loved Wall Street, from Morgan Stanley to Coinbase's listing. Our eclectic followers also tracked airlines, meme stocks and Chinese markets.
Viewsroom: More 2022 predictions and prescriptions 30 Dec 2021 M&A bankers will need to think small, in size, but big when it comes to helping clients meet net-zero climate targets. Watch for Big Pharma to tool up in the data arms race. And the Great Resignation will hit executive suites because running companies remotely is no fun.
Banker pay surge prompts rise of the robot analyst 30 Dec 2021 Junior dealmaker salaries blew past $100,000 in 2021 as Morgan Stanley, UBS and others vied for talent. That gives banks a reason to use machines rather than twentysomethings for gruntwork. Old-school bosses may resist, but financial incentives to automate will prevail in 2022.
Bankers fall under China’s offshore shadow 30 Dec 2021 Beijing is requiring foreign financial institutions that help Chinese companies list overseas to register and be monitored. Theoretically it’s easy enough to fill in the forms. In practice it means more due diligence and retroactive risk.
Jimmy Cayne fed myth of the Wall Street buccaneer 29 Dec 2021 The former Bear Stearns boss, who has died aged 87, is best known for leading his brokerage to near-collapse in 2008. The bridge-playing Cayne added a personal flavor to Bear’s fate. But the global financial crisis was a failure of entire systems, not a few individuals.
China is the ghost at the U.S. antitrust feast 29 Dec 2021 A move to slow consolidation could be a gift for Chinese competitors – or so Lockheed Martin says about its purchase of Aerojet Rocketdyne. Expect those arguments to spill out of the defense sector as CEOs facing adversarial watchdogs play the superpower-competition card.
Red-hot startups face a year of down rounds 29 Dec 2021 Venture capitalists invested more than $600 bln in 2021, an all-time high. The flood of money has boosted private-company valuations. Even a small correction would lower prices, alienating employees. Cash-burning upstarts in areas like rapid grocery delivery are most at risk.
Climate M&A will shift from risk to opportunity 29 Dec 2021 Defensive and green-signalling plays dominate ESG-touted deals, like BHP’s coal sales and Santos’ Oil Search swoop. SPACs are active, too. Next will be more ambitious, impactful tie-ups, from banks upping their skills to firms like Autodesk and Ecolab being predator or prey.
Pumped IPO market has slow puncture 28 Dec 2021 Listings on U.S. markets trashed prior records to raise over $300 billion in 2021, fueled by blank-check fever and tech newbies. Examined closely, it isn’t as bubbly as 1999-2000. But even ignoring SPAC indigestion, the performance of newly public shares points to a slowdown.
Vulture funds will have to learn how to fly again 28 Dec 2021 Distressed debt investors are looking like the pterodactyls of finance. Defaults are low, thanks to rock-bottom interest rates. Specialists like Oaktree can push into more opaque assets like private credit or far-flung places. But new risks will favour the bigger predators.
Chinese offshore IPO clarification looks ominous 28 Dec 2021 China’s state economic planner joins the ranks of watchdogs who can block overseas flotations, demanding firms in sensitive sectors hold foreign ownership below 30%. More red tape will further gum up the pipeline, and the rules are worrying for currently listed companies too.
India’s tech stock bubble is poised to deflate 28 Dec 2021 Investors will continue to afford banks and consumer firms dizzying valuations but will increasingly give their money-losing digital brethren a shorter leash. Some mix of rampant competition, slowing user growth and rising data charges will crash the party for the startup crew.
Mammoth re-engineering project begins: Germany 28 Dec 2021 Its manufacturing-led, carbon intensive economy is ill-suited to the 21st century. Chancellor Olaf Scholz and firms like Volkswagen will spend more on green and digital investment. The trick will be to plough on despite short-term supply chain problems and rising labour costs.
The Exchange: Environmentalist on Exxon’s board 28 Dec 2021 Kaisa Hietala was one of the directors elected by shareholders in May through activist Engine No. 1’s successful campaign to green up the $250 bln oil giant. The former Neste executive from Finland sat down with Rob Cox to explain her vision for creating sustainable businesses.
Morgan Stanley will frame new portrait at the helm 27 Dec 2021 James Gorman turned in better stock-price performance than most rivals over his CEO tenure. While peers like Goldman Sachs chase traditional banking customers, Gorman has set a course towards fast-growing wealth management. In 2022, he will script a graceful exit.
Selfridges’ buyer has hedge against retail risks 24 Dec 2021 Thailand’s Central Group and Austria’s Signa are paying a pricey $5 bln to acquire the department store group. With the future of retail uncertain post-pandemic, they’re taking a risk. Yet the scale of that punt is reduced by the fact this is also a prime real estate deal.
Big Quit sends world’s back office back offshore 24 Dec 2021 When the pandemic fades, and along with it the stigma of letting people go, the WFH revolution will embolden global employers to move jobs to low-cost centres again. While that should benefit India’s IT services providers, they’re ironically grappling with similar problems.
Climate-change money will flow freely to Plan B 24 Dec 2021 COP26’s so-so outcome makes damaging temperature rises more likely. At some point, optimal portfolios may require guns and canned food. Until then investors will lean towards shares in Syngenta, Veolia and other companies that aid adaptation to global warming not just mitigation.
Capital Calls: Enel’s payments punt 24 Dec 2021 Concise views on global finance: The 70 bln euro utility is paying up to 361 mln euros for a relatively pricey punt on fellow Italian payments firm Mooney.
ESG acronym is due for a spin-off of its initials 24 Dec 2021 Lumping environmental sustainability, social justice and corporate governance into a single bucket is a clumsy way to address three complex and distantly related challenges. Savvy executives and investors want to separate them. E, S and G will be more valuable after a breakup.
The cult of revenue is flying in thin air 23 Dec 2021 Top-line growth is the surest way to create wealth. But Wall Street has taken a good idea too far. The price-to-sales ratio for tech IPOs is at a 20-year high, even as profitability is dangerously distant. The coming year may sort the durable Amazons from the hyped-up WeWorks.
Ingredients will be the M&A flavour of the year 23 Dec 2021 Health and plant-conscious buyers are giving a new boost to additives that give products smell, taste, or extra nutrition. Companies like $39 bln DSM and $20 bln Kerry have reorganised to focus on the trend. Consumer giants demanding a fuller service will drive consolidation.
Zuckerberg has metaverse rivals who mean business 23 Dec 2021 Meta Platforms and Epic Games are trumpeting visions of an immersive, 3D internet. But even ignoring the technological challenges, consumers’ appetite for full-on virtual socialising is uncertain. The corporate world is a more manageable target – and that is Microsoft’s domain.
Italy will miss Mario Draghi’s premiership 23 Dec 2021 The ex-ECB boss may swap his prime minister role for that of president. A political version of a CEO-turned-chairman, Draghi could still steer affairs and reassure markets of Rome’s EU faith. But he would have less clout to push reform just as elections lead to stormier politics.