Bankers in FIG- What are your groups expecting for deal flow amid the geopolitical uncertainty

Based on the most helpful WSO content, FIG (Financial Institutions Group) bankers are navigating a mixed outlook for deal flow amid geopolitical uncertainty. Here are some key insights:

1. Geopolitical and Economic Factors:

   • Geopolitical tensions, such as trade tariffs and restrictions on capital outflows (e.g., Chinese capital), have impacted investment sales volumes in certain regions like LA and NYC. This creates opportunities for local buyers but also adds uncertainty to deal flow.
   • Broader economic concerns, including inflation risks, rising interest rates, and potential recessions, are weighing on valuations and slowing activity in some areas.

2. Sector-Specific Trends:

   • In Europe, there is strong deal flow in the financial institutions sector due to ongoing consolidation. Private equity firms are driving this activity by creating closed-book consolidator vehicles to acquire life and pension books, as well as smaller banks being used as buy-and-build platforms.
   • In the U.S., FIG deal flow has been mixed. Some groups, like Jefferies' FIG team, have seen a ramp-up in activity after poaching talent from other firms, while others report slower M&A activity overall.

3. Outlook and Sentiment:

   • While M&A activity in FIG is generally expected to remain busy post-crisis, the pace of deal flow may vary depending on the region and specific subsectors. For example, divestitures by large banks focusing on core businesses could create opportunities.
   • Analysts and bankers are cautious about predicting a V-shaped recovery or a boom in M&A and PE activity, as there are too many variables at play, including the duration and impact of geopolitical and economic challenges.

In summary, FIG bankers are seeing a mix of opportunities and challenges, with deal flow heavily influenced by regional dynamics, private equity activity, and macroeconomic conditions. While some areas are experiencing strong activity, others are facing headwinds due to geopolitical and economic uncertainty.

Sources: What is your opinion where we are in the cycle and how is your firm preparing for the next 12-18 months?, Deal Activity Down 30-40%, What Field Are You And in What Broad Region?, 2022 M&A Outlook, Advice for incoming IB/M&A analysts in the midst of a likely recession?