00:00We've been through a lot in the markets in the last year, and through all of that, there was so
00:03much expectation that we were at the cusp of a big boom in M&A, and we did see some
00:08of that coming back into the markets.
00:09I wonder what Iran and the war in the Middle East has done to your expectations about M&A.
00:15Yeah, we've been in, I think we're in the third year of a five to seven year cycle in M
00:20&A, and we've come into this year with pretty strong momentum last year.
00:24We're still up again on what was effectively the second highest year in M&A in this last year.
00:30And we see fundamentally, I think, we're mindful of the greater uncertainty that the conflict is introducing into the broader
00:37landscape.
00:38Obviously, that's particularly transmitting through energy costs and energy prices in particular impacting these regions.
00:44But when we speak to our clients, they remain quite forward-leaning.
00:47We had about 30 clients, sorry, 350 clients from 30 countries from across the region, some of the largest countries,
00:54companies in the region in our building yesterday for M&A conference.
00:57And we surveyed them on what they expect for this year, which we do every year.
01:02And the majority of them expects to do more this year than last year in M&A.
01:06And the biggest driver is growth.
01:08Okay, so would you say then, so yes, higher energy prices, also higher yields in some cases, which might make
01:13some transactions more expensive, although some assets have also become cheaper to buy.
01:18So do you think then, I mean, has the war dented your expectations about M&A yet or not?
01:25So far, we don't see a big shift in activity that's going on right now.
01:29I think the capital markets are much more sensitive and near-term sensitive, although I would say we had some
01:34very significant issuance in the equity markets and in the credit markets in the last couple of weeks.
01:38So markets remain quite open and robust.
01:40I think we're evaluating the timing of primary issuance to come to market.
01:45The pipeline for IPOs in Europe remains strong and remains robust, though, and we're quite confident for the year.
01:50But we're monitoring the situation since early days, and we'll have to see how this plays out.
01:54So against that backdrop, of course, energy and commodities, defence even, are front and centre.
01:58Are you seeing more M&A interest within those sectors?
02:02Yeah, so if you look at some of the themes in Europe, there's been a lot of M&A in
02:05the financial space.
02:06I think that's more broadly against the context of a desire for greater integration of financial markets, banking markets, capital
02:12markets in Europe.
02:13You can see the banking space, which has obviously had a very significant run from a valuation perspective as well,
02:18responding to it.
02:20There's a lot of focus on infrastructure defence, as you said, and reinvesting in those sectors in the region.
02:26And then, as you would expect, in particular in the context of the volatility we've seen in the energy markets,
02:32energy transition remains a significant theme, and that's where we're investing as well.
02:36And we launched earlier today a significant financing, the fourth financing for a Dutch company called Nebius, which is partnering
02:43with Meta and NVIDIA on building out data centre infrastructure in Europe in a 30 billion contract.
02:49And so the funding requirements for the broader infrastructure scale out and build up behind AI is also something that
02:57will drive increased investment in the region.
02:58And how are clients thinking about transactions, including Middle East and counterparties? Are those conversations still happening?
03:06Yeah, so first and foremost, we're focused on our people and our clients in the region, and we're mindful of
03:12their safety and the human experience of living there in the conflict.
03:18We stay close to our clients in the region. There's obviously, I think there's a little bit less focus on
03:25activity at the moment in the region.
03:26But I think we believe that the dynamism that we've seen in the Middle East from an investment perspective will
03:32continue over time and will be resilient.
03:34How is the sell-off in software feeding into you and the team and how you're thinking about this? How
03:39do you value these software companies at this point?
03:41Yeah, so I think the sell-off in software is largely a market response to the enormous change that we've
03:48seen and the speed of change in the technology and the capability of those technologies in AI.
03:53And this is investors reassessing the terminal value, if you will, and seeing uncertainty of the terminal value in software.
04:00Now, at the same time, that means there's a recognition of the capability of what AI can do and the
04:07impact it might have.
04:08Now, when we look at the actual underlying dynamic in software, we don't actually see that happening at this point
04:14in time.
04:15So there's a lot of, I guess, forward-looking dynamic in the equity markets, as you would expect.
04:22But when we speak to our investing clients, in particular in the private equity industry, they look at their software
04:27businesses right now and they sort of see how they perform.
04:31And at the end of the day, there's a lot of companies that are still growing significantly.
04:34They're having meaningful margins.
04:35But as many sectors, it's a sector that will go through transformation and adjustment and the equity markets is always
04:40the place where you see that first.
04:42You mentioned European IPOs and a healthy pipeline, which is interesting because the broader narrative is Europe is failing when
04:48it comes to offering attractive listing destinations, particularly for the tech space.
04:53What is underpinning that relatively healthy picture that you outlined?
04:57What is the momentum?
04:58What else needs to be done from a government's perspective, regulator's perspective, to ensure that Europe can play that role?
05:04Yeah, I think, look, it's important to remind ourselves the narrative about the IPO markets two years ago.
05:09The IPO market was failing and it was unavailable.
05:11And I think that was a reflection of a very dramatic repricing in the world that had caused a temporary
05:17dislocation in investors' ability to meet bid-ask on a price basis.
05:23But the market was there and the market was open.
05:24People didn't like the price.
05:26I think what we've seen more recently is the market has reopened, has opened up.
05:30Last year in October, we did the IPO of Very Shore in the Nordics, which was the largest sponsor exit
05:35in history globally.
05:36And so clearly the market is open and is open in Europe.
05:39And when we look at the pipeline for this year, we have a very, very significant number of conversations with
05:44companies who are getting ready to issue.
05:47Obviously, we'll monitor how the events in the Middle East will impact volatility in the markets.
05:51But at this point in time, we feel quite confident about the market being then open for business.
05:55Can you give us a rough number in terms of what the pipeline is looking like for European IPOs?
06:00Are we in single digits or double digits?
06:02What are we thinking?
06:04The number of situations we're working on is definitely double digits.
06:06How many of those will eventually come to market, I think we'll see throughout the year.
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