JPMorgan’s Top Banker in Europe Predicts ‘Big M&A’ Next Year

n]3]0{9a)i667x752f36kmd9_media_dl_1.png Bloomberg

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(Bloomberg) — A top JPMorgan Chase & Co. banker predicted that a surge in big-ticket dealmaking activity in Europe and business from new companies mushrooming in the Middle East as part of ambitious diversification efforts will drive the firm’s business in the wider region in coming years.

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“You should see big M&A in EMEA next year,” Conor Hillery, who was named the bank’s co-head for Europe, the Middle East and Africa this month, said in an interview on the sidelines of the Future Investment Initiative summit in Riyadh this week.

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“We’ve had headwinds blowing in the face of M&A for the last 18 months and now we have lower rates, a better view on valuations and a backlog of deals to get through,” said Hillery, who’s based in London and is also the head of JPMorgan’s investment banking business across EMEA.

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His comments echo views from others, including Goldman Sachs Group Inc. Chief Executive Officer David Solomon, who said at FII there had been “an incredible pickup in activity,” as more bosses target scale.

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M&A momentum has accelerated throughout the traditionally quieter summer months, and global deal values have topped $1 trillion in the third quarter for only the second time on record, according to data compiled by Bloomberg.

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Activity in Europe has picked up, with deals like Anglo American Plc’s offer for Teck Resources Ltd. to create a $50 billion mining giant, and buyout firm CapVest Partners’ nearly $12 billion deal for German drugmaker Stada Arzneimittel AG.

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Deep-pocketed Middle Eastern sovereign wealth funds have helped drive some of that dealflow, which has pushed global M&A volumes past $3 trillion this year. Just last month, Saudi Arabia’s Public Investment Fund agreed to take video game maker Electronic Arts Inc. private in a record $55 billion leveraged buyout.

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New York-based JPMorgan underwrote a $20 billion debt facility on that deal, which is expected to generate roughly $500 million in fees for banks tied to the financing. The bank has now operated in the kingdom for 90 years, which has helped its business in a country where long-term relationships play a vital role. 

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A JPMorgan event ahead of FII attracted top executives from the Saudi government, state energy firm Aramco and the PIF, people familiar with the matter said. Some of the bank’s most senior executives including Chief Executive Jamie Dimon also attended the event.

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The bank recently received its license for a regional headquarters in Saudi Arabia, amid a push by the PIF for foreign firms to expand locally. “We have about 150 people in Saudi and 450 people in the region,” Hillery said. “Over time, we see that number expanding significantly and we plan to grow and expand all our businesses here from CIB to asset management and markets.”

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Emerging companies in the Middle East and their financing needs will offer avenues for growth, he said. While the bank previously predominantly worked with oil & gas firms, its client base has grown across multiple sectors. Riyadh, for its part, is pushing into areas like artificial intelligence as part of Crown Prince Mohammed bin Salman’s diversification drive.