Goldman Sachs Group's top dealmakers are bullish about a recovery in global mergers and acquisitions (M&A) in the second half of 2023 despite a slowdown in economic growth and a weak credit market.
As economic forecasts turn gloomier, executives at the Wall Street powerhouse — including Dan Dees and Jim Esposito, who jointly run its global banking and markets division — said they are primed for a recovery when financing markets ease up, potentially as early as the second half of 2023.
The projections come after global M&A values slumped 36 per cent to $3.78 trillion in 2022, from a record $5.91 trillion in 2021, according to Dealogic data. Banks, including Goldman, have cut jobs as activity slumps.
In a series of interviews with Reuters in recent weeks, top Goldman dealmakers who have been at the firm for more than two decades, said there are plenty of reasons for global deal activity to pick up.
Big investors are sitting on piles of cash preparing to fund transactions, and large companies earning solid profits are looking to diversify their businesses, but they are waiting for economic uncertainty to fade, the bankers said.
"I remain quite bullish, maybe not on the first quarter, but certainly as we go forward," said Stephan Feldgoise, global co-head of M&A. Still, there are "clear headwinds in the first part" of 2023, he said.
Mark Sorrell, Mr Feldgoise's counterpart in London, sees corporate clients jumping on deals when financing is available because their underlying motives are still intact, such as gaining new customers, new products or geographic expansion.
Companies are staying on the sidelines because their creditors have pulled back from making riskier loans for buy-outs as interest rates rise, but that could change rapidly, he said.
"When the financing market comes back, we don't know when it will happen, but it will happen because of the amount of liquidity in the system, we think transaction volumes and activity will recover," Mr Sorrell said.
The resurgence may be "quicker than people expect", he said.
If markets recover, Goldman's investment bankers stand to gain. The company has been the top global M&A adviser by revenue for the past 20 years, followed by JPMorgan Chase & Co, according to Dealogic data.
Despite that position, Goldman is not immune to a slowdown. Its investment-banking division accounted for just 13 per cent of the company's revenue in the third quarter, shrinking from 27 per cent a year earlier and 23 per cent in the third quarter of 2018, when chief executive David Solomon took the helm.
The bank is preparing to cut thousands of employees in the new year, intensifying an earlier round of about 500 lay-offs in September, Reuters reported earlier. Bonuses will also be slashed.
Goldman's leaders said staffing levels were being adjusted to fit the economic environment, and in some cases, employees were being reassigned to more active areas.
The bank sees opportunities in advising clients who are being targeted by activist investors, or fintech companies open to suitors after their valuations plunged, said Russ Hutchinson, the bank's chief operating officer of global M&A.
The fortunes of Wall Street's dealmakers hinge to a large extent on whether the leveraged loan market will reawaken after a lull last year. Some observers have drawn parallels with the global financial crisis, when plunging corporate valuations and a recession triggered by a collapse in the housing market froze the leveraged buyout (LBO) market.
The current stress in the credit market is vastly different from 2008, said Mr Esposito, Goldman's co-head of global banking and markets. During the crisis, the banking industry had more than $700 billion of stalled LBO exposure at its peak, which took 12 to 18 months to clear.
Today, "there's probably between $100 and $125 billion ... it's an almost inconsequential number compared to 2008, and equally importantly, the credit markets are so much deeper".
The market stress means lenders are less willing to finance deals because they are saddled with tens of billions of dollars of so-called "hung debt" that they are unable to sell on to investors.
But for all the market turbulence, Goldman veterans are confident.
"When you go through periods of volatility, you know it creates opportunity," Mr Dees said.
Race card
1.30pm: Handicap (PA) Dh 50,000 (Dirt) 1,400m
2pm: Handicap (TB) Dh 84,000 (D) 1,400m
2.30pm: Maiden (TB) Dh 60,000 (D) 1,200m
3pm: Conditions (TB) Dh 100,000 (D) 1.950m
3.30pm: Handicap (TB) Dh 76,000 (D) 1,800m
4pm: Maiden (TB) Dh 60,000 (D) 1,600m
4.30pm: Handicap (TB) Dh 68,000 (D) 1,000m
Company profile
Name: Steppi
Founders: Joe Franklin and Milos Savic
Launched: February 2020
Size: 10,000 users by the end of July and a goal of 200,000 users by the end of the year
Employees: Five
Based: Jumeirah Lakes Towers, Dubai
Financing stage: Two seed rounds – the first sourced from angel investors and the founders' personal savings
Second round raised Dh720,000 from silent investors in June this year
Abramovich London
A Kensington Palace Gardens house with 15 bedrooms is valued at more than £150 million.
A three-storey penthouse at Chelsea Waterfront bought for £22 million.
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Dubai works towards better air quality by 2021
Dubai is on a mission to record good air quality for 90 per cent of the year – up from 86 per cent annually today – by 2021.
The municipality plans to have seven mobile air-monitoring stations by 2020 to capture more accurate data in hourly and daily trends of pollution.
These will be on the Palm Jumeirah, Al Qusais, Muhaisnah, Rashidiyah, Al Wasl, Al Quoz and Dubai Investment Park.
“It will allow real-time responding for emergency cases,” said Khaldoon Al Daraji, first environment safety officer at the municipality.
“We’re in a good position except for the cases that are out of our hands, such as sandstorms.
“Sandstorms are our main concern because the UAE is just a receiver.
“The hotspots are Iran, Saudi Arabia and southern Iraq, but we’re working hard with the region to reduce the cycle of sandstorm generation.”
Mr Al Daraji said monitoring as it stood covered 47 per cent of Dubai.
There are 12 fixed stations in the emirate, but Dubai also receives information from monitors belonging to other entities.
“There are 25 stations in total,” Mr Al Daraji said.
“We added new technology and equipment used for the first time for the detection of heavy metals.
“A hundred parameters can be detected but we want to expand it to make sure that the data captured can allow a baseline study in some areas to ensure they are well positioned.”
Types of bank fraud
1) Phishing
Fraudsters send an unsolicited email that appears to be from a financial institution or online retailer. The hoax email requests that you provide sensitive information, often by clicking on to a link leading to a fake website.
2) Smishing
The SMS equivalent of phishing. Fraudsters falsify the telephone number through “text spoofing,” so that it appears to be a genuine text from the bank.
3) Vishing
The telephone equivalent of phishing and smishing. Fraudsters may pose as bank staff, police or government officials. They may persuade the consumer to transfer money or divulge personal information.
4) SIM swap
Fraudsters duplicate the SIM of your mobile number without your knowledge or authorisation, allowing them to conduct financial transactions with your bank.
5) Identity theft
Someone illegally obtains your confidential information, through various ways, such as theft of your wallet, bank and utility bill statements, computer intrusion and social networks.
6) Prize scams
Fraudsters claiming to be authorised representatives from well-known organisations (such as Etisalat, du, Dubai Shopping Festival, Expo2020, Lulu Hypermarket etc) contact victims to tell them they have won a cash prize and request them to share confidential banking details to transfer the prize money.
Seven tips from Emirates NBD
1. Never respond to e-mails, calls or messages asking for account, card or internet banking details
2. Never store a card PIN (personal identification number) in your mobile or in your wallet
3. Ensure online shopping websites are secure and verified before providing card details
4. Change passwords periodically as a precautionary measure
5. Never share authentication data such as passwords, card PINs and OTPs (one-time passwords) with third parties
6. Track bank notifications regarding transaction discrepancies
7. Report lost or stolen debit and credit cards immediately
Fight card
Preliminaries:
Nouredine Samir (UAE) v Sheroz Kholmirzav (UZB); Lucas Porst (SWE) v Ellis Barboza (GBR); Mouhmad Amine Alharar (MAR) v Mohammed Mardi (UAE); Ibrahim Bilal (UAE) v Spyro Besiri (GRE); Aslamjan Ortikov (UZB) v Joshua Ridgwell (GBR)
Main card:
Carlos Prates (BRA) v Dmitry Valent (BLR); Bobirjon Tagiev (UZB) v Valentin Thibaut (FRA); Arthur Meyer (FRA) v Hicham Moujtahid (BEL); Ines Es Salehy (BEL) v Myriame Djedidi (FRA); Craig Coakley (IRE) v Deniz Demirkapu (TUR); Artem Avanesov (ARM) v Badreddine Attif (MAR); Abdulvosid Buranov (RUS) v Akram Hamidi (FRA)
Title card:
Intercontinental Lightweight: Ilyass Habibali (UAE) v Angel Marquez (ESP)
Intercontinental Middleweight: Amine El Moatassime (UAE) v Francesco Iadanza (ITA)
Asian Featherweight: Zakaria El Jamari (UAE) v Phillip Delarmino (PHI)
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Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
Yahya Al Ghassani's bio
Date of birth: April 18, 1998
Playing position: Winger
Clubs: 2015-2017 – Al Ahli Dubai; March-June 2018 – Paris FC; August – Al Wahda
Most F1 world titles
7 — Michael Schumacher (1994, ’95, 2000, ’01 ’02, ’03, ’04)
7 — Lewis Hamilton (2008, ’14,’15, ’17, ’18, ’19, ’20)
5 — Juan Manuel Fangio (1951, ’54, ’55, ’56, ’57)
4 — Alain Prost (1985, ’86, ’89, ’93)
4 — Sebastian Vettel (2010, ’11, ’12, ’13)
Sholto Byrnes on Myanmar politics
The Perfect Couple
Starring: Nicole Kidman, Liev Schreiber, Jack Reynor
Creator: Jenna Lamia
Rating: 3/5
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Anxiety and work stress major factors
Anxiety, work stress and social isolation are all factors in the recogised rise in mental health problems.
A study UAE Ministry of Health researchers published in the summer also cited struggles with weight and illnesses as major contributors.
Its authors analysed a dozen separate UAE studies between 2007 and 2017. Prevalence was often higher in university students, women and in people on low incomes.
One showed 28 per cent of female students at a Dubai university reported symptoms linked to depression. Another in Al Ain found 22.2 per cent of students had depressive symptoms - five times the global average.
It said the country has made strides to address mental health problems but said: “Our review highlights the overall prevalence of depressive symptoms and depression, which may long have been overlooked."
Prof Samir Al Adawi, of the department of behavioural medicine at Sultan Qaboos University in Oman, who was not involved in the study but is a recognised expert in the Gulf, said how mental health is discussed varies significantly between cultures and nationalities.
“The problem we have in the Gulf is the cross-cultural differences and how people articulate emotional distress," said Prof Al Adawi.
“Someone will say that I have physical complaints rather than emotional complaints. This is the major problem with any discussion around depression."
Daniel Bardsley
UAE currency: the story behind the money in your pockets
Personalities on the Plate: The Lives and Minds of Animals We Eat
Barbara J King, University of Chicago Press
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
