LONDON - The British capital was the place to be in 2005, if you were a businessman looking for a quick deal or even an investor looking for solid entities to park your cash into. Barring the tragic bombings in July, London was a beehive of business activity in 2005.
And it is the place to be in the coming year as well as the City sees a plethora of takeovers as private equity groups, hedge funds and other investment companies prepare to shrug off a below par economic performance in the current year.
Now Morgan Stanley has come out with figures that confirm London as the major merger and acquisitions center in the coming year, "This is absolutely the best time if you are a seller of a business to put it on the market. The corporates are back and private equity buyers have the firepower. It's a true seller's market," said Paulo Pereira, Morgan Stanley's head of European mergers and acquisitions.
He was reported as saying on the Telegraph that 2006 could also be boom time for "mergers of equals." This means that deals between 30 billion and £50 billion are likely to be sealed. The business environment has not seen such deals for quite sometime now.
The investment bank says that this optimism stems form the fact that low interest rates, spiraling corporate profits and the emergence of India and China as major business players is bound to give a boost to the dour market in Europe. "These are very strong fundamentals and they are here to stay," Pereira commented. Morgan Stanley also predicted a bumper year for private equity funds as they had an estimated £175 billion at their disposal.
"Private equity houses have raised unprecedented levels of equity funds and at the same time there is a lot of liquidity in the system with which they can further leverage that equity purchasing power," the bank said.
UK has already had a great year as far as merger activity is concerned. It raked in £400 billion as a result of M&A deals as compared to £169 billion in Germany and £153 billion in France, the other European powerhouses.
Morgan Stanley expects this to continue into the New Year, "Clearly there is a lot of pending consolidation in financial institutions and also in healthcare. At the same time, this also applies to media, communications and energy despite their strong showing this year," Pereira said.
Posted
on : Sun, 18 Dec 2005 20:05 GMT | Business News
By : Salim Patel
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