“We haven’t seen that repeat this year,” she said,noting buying and selling of businesses,or mergers and acquisitions activity,had reached a 10-year low in volume and revenue.
“Despite the perceived slowing of interest rate increases and equity markets being up,market activity in mergers and acquisitions still has not picked up,confidence has not returned and activity levels have not returned. We are finding in sales processes where previously we’ve had five buyers,there may be two.”
Last year,Macquarie’s record results were partly driven by a strong deal-making environment that helped it to profit from selling several of its major green assets.
While Wikramanayake said realisations,or asset sales,“should pick up”,she said it was taking longer than in previous periods during which interest rates had started to peak.
“At some point,[realisations] have to come back. There’s huge liquidity and dry powder out there. We’re sitting on $35 billion-plus,which is the largest we’ve ever had.”
Jefferies equity analyst Matthew Wilson said while the timing of asset realisations may disappoint some,Macquarie was playing the long game,showing a disciplined focus on value.
“The 2024 financial year will likely mark a trough in financial markets activity,” he said. “As we look forward,Macquarie is well placed to benefit from increased fund-raising activity,greater asset realisations,M&A reversion and more normal levels of volatility as markets consolidate higher interest rates globally.”