What is the next hottest coverage group?
Coverage groups are cyclical and nearly every single one of them at some point were seen the way Tech has been seen over the last 3-5 years.
I think tech is starting to slide into being seen as “another coverage group” rather than “the coverage group” at the moment
I know the market is not favorable for tech right now but I still feel like another coverage group could be coming in to be the next big thing. What do you all think it will be?
I am bullish on Energy and Industrials (yes boring).
US infrastructure is outdated and we have a huge Public Sector push to bring manufacturing back. With that Clean Energy seems to be the focal point for atleast this Administration.
Healthcare has been and will continue to be a huge winner
Renewable Energy/Clean Energy looks very promising
Multiple banks have spent tons of money getting good seniors and groups together (see GS, JEF, Citi, LAZ). Also seems to be a lot of growth (over the past 3 years) in M&A activity from what I see on my banks league tables as well.
Kind of surprising to me but maybe with all of the push into EVs, solar, wind, etc. it is finally catching up to IB? Legit seeing banks have separate groups just for clean energy/renewables which is huge imo.
Currently in HC and don’t feel like it is really what people make it out to be in terms of being super hot/prestigious
Also seems like every PE fund is trying to get an Energy Infra or Clean Energy Fund going or integrate it into their flagship
"Prestige" feel in HC depends on whether you're working in pharma / biotech and adjacent services (feels very important / hot), payor services / value-based care (also feels very "preftige") or typical services (primary care, physician practice management, dental, etc. - feels very unpreftige and LMM).
Currently at a top EB in pharma/biotech. Honestly doesn’t feel insanely prestigious the way saying you were at GS TMT did in 2021
HCIT is also a decent place to be. Good amount of sponsor activity out there.
Digital Health's valuations are way down compared to a few years ago but I have a hard time believing it will stay that way in the long run.
Value based primary care (and to lesser extent specialty) has been extremely hot for past few years and will continue to be
From a Canadian banker in a mining group, there has been a huge push towards Uranium / Lithium mining companies. Seems like the space is just starting to pick up / will have a lot of capital raised in the next few years
still tech just different verticals within
Battery metals. Think some firms still cover out of M&M or NR and others have separate Energy Transition groups.
Ah yes like bismuth which was supposedly getting extremely scarce but now there's oversupply and prices have crashed
Who tf banks bismuth lmao. What an odd take
Energy transition/ clean energy group received the most investment from my firm this year
healthcare, all the baddies love healthcare.
i dont know about coverage, but i expect to see more capital structure advisory type groups based on the ongoing growth of private credit. this wont make up for the loss of leveraged finance fees though
Would this type of advisory be under another product group or its own product?
some have separate product teams (eg evercore, lazard, lincoln) while I think others have them within restructuring (Guggenheim?). Others may have more insight
I think lending groups in banks are in trouble. Private credit can take on riskier deals, isn't subject to the same capital requirements as banks, and people from all levels are incentivized to get it right. However, I think this side of the business will become more heavily regulated. Imagine a private credit company that owns a bunch of companies employing millions of people goes bust, now that is a tricky situation to be in as a regulator/government. Some government organization recently passed regulation to force private companies to disclose more information, which is only the beginning of these policies.
DataCenter companies will be expanding, and building additional datacenters to meet the demand of the technology changes seen in business from cloud, AI, and streaming, and oher things. However, this asset class has grown very rapidly over the past few years and I think investors and banks do not want to increase their exposure to this asset class for the foreseaable future. Makes me wonder where these datacenter companies will get the cash to sustain their capex needs.
Solar loan business will be hot. Makes sense to get a solar loan when your utility bill is increasing 12% yoy. I think Solar loans will start to pick up in Europe and Asia.
On the data center / digital infra point (excl. Towers) part of that rapid expansion was that banks and investors eventually started underwriting mickey mouse business plans which will give rise to a lot of restructuring/credit activity in the near future. But I do not really expect a massive slowdown in the sector given its actual utility
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