2020 has been full of twists and turns, amongst which a global health crisis, Brexit deal uncertainties, US presidential elections, and persistent worldwide trade tensions. Despite a very dynamic start to the year, M&A activity significantly cut back in the first semester, directly impacted by the scale of the pandemic and the need for companies to focus on short-term crisis management. The second quarter saw the lowest level of transaction volumes in the last eight years. However, activity resumed at a very strong pace post summer, even reaching a peak in September and allowing 2020 to land in line with 2019 level.
Several transactions led by HSBC are good indicators of current M&A trends that supported the market recovery post H1. In particular, (i) HSBC advised Veolia on its public offer for Suez, launched at the end of August. This transaction illustrated a resumption in large industrial consolidation moves; (ii) HSBC advised CDPQ on the Alstom/Bombardier Transportation transaction, establishing a French champion in the railway equipment sector, which should benefit from global “mega drivers” in the coming years; (iii) the bank advised Euronext on the acquisition of Borsa Italiana, for an enterprise value of over 4 billion euros, confirming the appetite of financially healthy companies to pursue transformational M&A activity; (iv) finally, HSBC worked with Auchan Retail on the sale of its stake in Chinese subsidiary SunArt to its partner Alibaba for an amount of c. EUR 3 billion, illustrating the strength and relevance of our positioning on the France-China corridor.
2020 was therefore a surprising vintage and, despite the uncertainties around the end of the pandemic, it should lead to a year 2021 rich in M&A operations. All the conditions are there to support the rebound: accommodative monetary policy of central banks directly supporting the equity markets, expected recovery of the global economy, record levels of liquidity held by private equity funds, accelerating digitalization trends advantaging technological values, under pressure health environment benefiting different layers of the health sector (clinics, medical biology, etc). Our customers should therefore successfully carry on with their external growth strategies and expand internationally this year, though having to deal with high valuation datapoints and an ever-present activist threat.
