Today is Tuesday, April 26, 2022, and here’s your weekly selection of essential intelligence on financial markets and the global economy from S&P Global Market Intelligence. Subscribe to be notified of each new Insight Weekly.
In this edition, we take a close look at deal-making activity among private equity and venture capital firms. In the U.S., the number of deals valued below $100 million dropped 53% in 2021 as investors loaded with cash sought bigger, later-stage investments. Energy transition companies were attractive targets, with experts noting the possibility of outsized returns from carbon capture, green hydrogen and emerging clean technologies. Global deal-making activity has been mixed so far in 2022, with a year-over-year increase in deal volume and a decline in total transaction value in the first quarter.
Record debt levels, rising interest rates, surging food and energy prices, and Russia's invasion of Ukraine threaten to spark the worst sovereign debt crisis in 40 years. Sovereign government borrowing surged to a record $14.871 trillion in 2020 and will remain above pre-pandemic levels through at least 2022, according to S&P Global Ratings. Governments borrowed heavily to fund measures to ward off the effects of the COVID-19 pandemic and are now facing steep cost increases to service that debt.
After registering its millionth light-duty electric vehicle sale in late 2021, California is bracing for millions more to hit the road, and the grid, in coming years. To ensure a smooth ride to higher levels of adoption, energy planners, researchers and utilities in the world's fifth-largest economy are gaming out scenarios for how many EVs Californians will purchase, how much electricity they will need and when they will need it.
- In Focus: Private Equity Deal-Making
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Global private equity deal value slips in March, Q1
A total of 2,106 deals were announced in March, a 7.4% decrease from 2,274 deals in March 2021, according to S&P Global Market Intelligence data.
—Read the full article from S&P Global Market Intelligence
PE deals below $100M plunge in 2021 as cash-rich firms seek bigger buys
Nonpublic, U.S.-based private equity and venture capital firms made 76 deals valued below $100 million in 2021, compared with 162 deals valued at $100 million or more, S&P Global Market Intelligence data showed.
—Read the full article from S&P Global Market Intelligence
Private money flowing freely to energy transition companies, technologies
Venture capital and private equity investment in energy transition companies hit a 10-year high in 2021, reflecting investors' growing role in the global pursuit of net-zero goals.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Credit and Markets
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US companies keep debt burdens under control ahead of rising rates
The burden of debt has become less of a concern for U.S. companies over the course of COVID-19, according to the latest S&P Global Market Intelligence data.
—Read the full article from S&P Global Market Intelligence
Global debt crisis looms as sovereign borrowing dips from pandemic high
S&P Global Ratings forecasts government borrowing will total $10.4 trillion in 2022, down from a record 2020, but about one-third above pre-pandemic levels.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Financials
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Increased regulatory scrutiny puts pause on large bank M&A
Only one U.S. bank megadeal — a transaction with a value of at least $500 million at announcement — was announced in the first quarter, compared to three in the first quarters of each of the last three years.
—Read the full article from S&P Global Market Intelligence
Big bank revenue falls in Q1 despite uptick in net interest income
Declines in investment banking and mortgage businesses sapped pre-provision earnings growth, although guidance pointed to a big further lift from rising interest rates.
—Read the full article from S&P Global Market Intelligence
Banks can expect less aggressive Fed regulation under Michael Barr
Bank regulation is likely to be more moderate if Michael Barr, U.S. President Joe Biden's nominee to be the Federal Reserve's vice chair for supervision, is confirmed.
—Read the full article from S&P Global Market Intelligence
European M&A activity dips in Q1 amid war, rising inflation
Companies made 246 deals from January to March, declining from the 278 reached in the year-ago period, according to S&P Global Market Intelligence data.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Insurance
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Inflation, war to weigh on some P&C insurers' Q1 results despite firm pricing
A majority of the 19 largest publicly traded U.S. P&C insurers are expected to post sequentially lower EPS in the first quarter, according to an examination of sell-side analyst forecasts.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Fintech
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Credit-focused fintechs target LatAm's underbanked
New fintechs are targeting individuals and small businesses in Latin America that traditionally have been unable to access credits. Using artificial intelligence and machine learning, these companies are betting big on robust demand.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Insurance
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Inflation, war to weigh on some P&C insurers' Q1 results despite firm pricing
A majority of the 19 largest publicly traded U.S. P&C insurers are expected to post sequentially lower EPS in the first quarter, according to an examination of sell-side analyst forecasts.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Supply Chain
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Push to reshore US manufacturing challenged by reliance on global supply chain
U.S. companies are talking a good game on reshoring manufacturing jobs after massive supply chain disruption, yet rising imports from Asia suggest any reshoring will be part of a broader diversification of supply chains.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Technology, Media and Telecommunications
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Battle for Twitter's future boils down to innovation vs. distraction
Some analysts question how seriously to take Elon Musk's offer and whether Musk has the right temperament to lead in the tech space. Others believe Twitter shareholders should "take this offer and run."
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Metals and Mining
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Hedging activity among Chinese miners on the rise, even after LME debacle
The number of Chinese metals and mining companies launching hedging programs reached a record high in 2021, as more businesses picked derivatives to protect future revenue amid rising volatility in commodity and foreign exchange markets.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Energy and Utilities
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'A lot of uncertainty' as Calif. grid braces for electric vehicle surge
Energy planners, researchers and utilities in California are trying to assess future electric vehicle purchasing trends and a related increase in demand for electricity.
—Read the full article from S&P Global Market Intelligence
US EPA's plan for interstate smog might force even more early coal retirements
The U.S. Environmental Protection Agency's latest cross-state air pollution proposal could prompt some of the nation's top owners of coal-fired generation capacity to accelerate plant retirements.
—Read the full article from S&P Global Market Intelligence
US power sector company-level, asset deals begin 2022 modestly
The number of company-level M&A transactions shrank to eight in the first quarter of 2022, compared to 20 in the fourth quarter of 2021 and 16 in the first quarter of 2021.
—Read the full article from S&P Global Market Intelligence
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- This Week in M&A
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Deal Profile: National Bank Holdings to acquire Utah-based Community Bancorp.
BlueScope's $500M deal for metal painter tops metals M&A for week ended April 15
SocGen's exit from Russia off-loads business struggling to recover former glory
Potential buyout shakes up Southwest Gas strategy, Icahn's takeover bid
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