Gambit Corporate Finance announces the publication of its Debt Capital Markets Review for Summer 2019.
Report Summary:
- The macroeconomic environment remains positive with global growth predicted at 3.3% for 2019 and 3.6% in 2020 according to the IMF.
- Brexit remains a primary risk in the UK and whilst the deadline has been extended, removing the immediate concern of a “no deal”, the lack of progress within the UK parliament continues to frustrate and prolong uncertainty.
- Brexit has not impacted the availability of credit, as companies are still able to access finance. The reduction in lending is primarily due to a fall in demand from the corporate sector, as corporates have focused on strengthening balance sheets and formulating Brexit plans.
- So far in 2019, the UK has outperformed growth expectations, and the Bank of England has revised its economic growth forecasts upwards to 1.5% and 1.6% in 2019 and 2020 respectively.
- In many markets organic growth rates are slowing, this will force ambitious companies to pursue acquisitions and other strategic initiatives in order to boost growth. Having the right capital structure and liquidity will play an important part in delivering such initiatives.
- Central bankers in the US, Japan and Europe are signalling that interest rates are likely to remain unchanged until at least the end of 2019.
- M&A markets remain active with deal activity increasing across a number of countries and sectors. It is expected that consolidation will continue to be a dominant theme in a number of sectors throughout 2019.
- Disclosed mid-market private valuation multiples remain strong, attracting an average multiple of 10.4x EBITDA. These multiples are likely to be sustained due to increasing activity from strategic acquirers coupled with further pressure on financial investors to deploy funds.
- Leverage multiples have remained at similar levels to 2018, with a number of mid-market private equity deals being syndicated at 6x EBITDA and above. This is likely to remain the case as private debt funds look to deploy investable capital and private equity maintain the use of leverage in order to boost portfolio returns.
- Whilst the UK is the most prevalent European market for alternative funders, there remains a general lack of awareness of the various funding solutions available.
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