ISSUE 2 | 2022
16
LOOKING AHEAD
The Industrials & Chemicals sector experienced an uplift in activity with 20 transactions reported in the quarter. Most of these deals were cross-border as trade buyers turned to M&A to achieve growth and develop their global presence. Finally, the Pharma, Medical & Biotech sector remained resilient with 10 transactions, including the notable SPAC deal involving the USD 412m merger of psychedelic science leader Eleusis with
over USD 1.25bn, while Wayflyer, the fintech company engaged with providing revenue‑based financing to e-commerce brands, attracted USD 150m institutional funding at a market value of USD 1.6bn. Similarly in the UK, eight of the Top 20 transactions were in the TMT sector including Ontario Teachers Pension Plan investing USD 265m into the consumer credit platform Lendable at a valuation of £3.5bn and another unicorn fintech company GoCardless raising USD 312m at a valuation of USD 2.1bn. Business Services was the second most active sector with 22 transactions reported, including the acquisition of Autorama UK by Autotrader Group plc for USD 252m. M&A activity in Financial Services remained steady with 17 transactions including Exponent’s sale of Enra Group, a provider of lending and broking short term bridge mortgages services, to US hedge fund Elliot Management for USD 465m and Pollen Street Capital’s sale of 1st Stop Group, a local brokerage agency providing consumer loans, to Tandem Money for a similar value.
At the time of writing we are faced with the horrors of war, significant inflation forecasts and rising interest rates. Both the UK Chancellor and Ireland’s Finance Minister have revised the GDP growth forecasts downwards for this year, citing the conflict in the Ukraine as the reason. Despite this, the UK is still projected to grow by 3.2% and Ireland by 4.8%. At this point the M&A pipeline remains active with 548 deals in the pipeline as sellers continue to look to avail of increased valuations, while buyers seek to deploy capital. As expected, TMT is the hottest area of activity with 27% of all rumoured transactions, although this is often understated when compared to the percentage of completed transactions. It is interesting to note that the Consumer sector represents over 14% of pipeline transactions. This is likely to be driven by pent-up demand post-COVID. However, with inflation expected to average 7.4% this year, (i.e. it could be higher for several months) it is possible that many Consumer deals will have to be put on ice again until we get more certainty on the longer-term impact on consumer spending.
Silver Spike Acquisition Corp. Despite a lot of interest in the
Renewable Energy sector there is still a limited amount of reported M&A activity. There were only five mid-market transactions across the Energy sector during the first quarter, of which only two featured in the Top 20 transactions – these were Quantum Energy Partners’ USD 400m investment into Trident Energy mgmt. and Endeavour Energy’s acquisition of the UK upstream portfolio from MOL Hungarian Gas & Oil for USD 305m. We expect deal activity in this sector to increase as investment continues to move away from fossil fuels towards clean energy companies.
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