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Good morning. We bring you an exclusive story from Davos today as the World Economic Forum’s annual meeting comes to an end.
Private equity executives at the gathering have predicted a sharp increase in takeover activity as buyout firms that have held on to investments in the hope of higher prices finally begin to capitulate.
There has been a marked drop in private equity groups selling portfolio companies since a peak in 2021, as rising interest rates have made financing more difficult and hurt valuations.
But investors in buyout funds have begun to increase pressure on groups to sell long-held investments and start returning cash, forcing them to reckon with lower prices and lock in returns.
“For the last 24 months, there has been a disconnect on valuation expectation between buyers and sellers. There is now a real sense of pragmatism setting in,” said Anna Skoglund, who leads the European financial and strategic investors group at Goldman Sachs. Read more on what private equity executives in Davos are saying about the outlook for the industry.
Backgammon, wine and AI: The FT’s corporate finance newsletter Due Diligence reports on the hot topics at this year’s annual schmoozefest. Premium subscribers can sign up here and you can upgrade your subscription here.
And here’s what else I’m watching today:
Monetary policy: Federal Reserve Bank of Chicago president Austan Goolsbee and San Francisco Federal Reserve Bank president Mary Daly will both make television appearances this morning. Christine Lagarde, president of the European Central Bank, and IMF managing director Kristalina Georgieva speak at “The Global Economic Outlook” event on the final day of the World Economic Forum in Davos.
Economic data: The University of Michigan publishes results from its US consumer sentiment survey.
Rudy Giuliani: Donald Trump’s former attorney will make his first appearance in bankruptcy court. He will ask a judge for permission to appeal against last month’s $148mn defamation judgment.
How well did you keep up with the news this week? Take our quiz.
Five more top stories
1. China has called on “all relevant parties” to “ensure the safety of navigation in the Red Sea” as analysts warned that Houthi rebel attacks on commercial shipping threaten the world’s second-largest economy. But Beijing stopped short of signalling diplomatic or military assistance to defuse the crisis in the waterway.
Israel-Hamas war: Arab states are working on an initiative to secure a ceasefire and the release of hostages in Gaza as part of a broader plan that could offer Israel a normalisation of relations if it agrees to “irreversible” steps towards the creation of a Palestinian state, senior officials have told the FT.
2. The government in Beijing has also said it will rein in expansion of its electric vehicle sector. Xin Guobin, vice-minister of industry and information technology, said earlier today China would take “forceful measures” to address “blind” construction of new EV projects. The EV sector has been one of the bright spots in the country’s struggling economy.
3. Cohere, the artificial intelligence start-up founded by ex-Google scientists, is in talks to raise as much as $1bn in financing. The five-year-old, Toronto-based start up was co-founded by Aidan Gomez, Nick Frosst, and Ivan Zhang and has become one of the most high profile AI companies in North America. Here’s more on its fundraising plan.
4. Congress has passed a short-term spending bill to avert a partial US government shutdown, giving Capitol Hill leaders more time to work out a permanent funding solution and freeing up lawmakers to focus on more contentious negotiations over aid to Ukraine. The bill will now go to President Joe Biden for his signature. Here’s how long the temporary reprieve will last.
5. JPMorgan Chase paid longtime chief Jamie Dimon a record $36mn last year, up about 4 per cent from the previous year. The pay increase for Dimon, who has led the lender since the end of 2005, comes after a year in which the US bank reported record profits of almost $50bn and was significantly more profitable than its peers.
The Big Read
“The situation is deplorable,” said a Ukrainian soldier serving on the front lines. The damning assessment reflects the military’s dimming prospects as the second anniversary of Russia’s all-out invasion nears. Kyiv has abandoned hopes of a swift victory and is instead girding itself for a drawn-out war, with President Volodymyr Zelenskyy declaring last month that “a new phase” had set in. As it moves from an offensive to a defensive posture, here’s how Ukraine plans to survive 2024.
We’re also reading . . .
Jeffrey Epstein: Although they failed to reveal any smoking guns, unsealed papers on the late sex offender’s dealings have provided a long-overdue voice to his victims.
Boeing storm: The new head of the US aviation regulator has a fine line to tread between being seen to be tough with the company and ensuring a proper investigative process.
Investing: Forget get rich quick, writes Claer Barrett. When it comes to stocks, aiming for consistency will help you get richer slowly. You can sign up for Claer’s personal finance series here.
Chart of the day
A battle for coffee customers is brewing in India. Starbucks announced last week it planned to triple the number of outlets in the country by 2028 and Pret A Manger launched there last year. Canadian brand Tim Hortons and Costa Coffee are also expanding in the country of 1.4bn. Goldman Sachs estimates the number of people earning above $10,000 a year in India will grow from 60mn to 100mn by 2027, bringing a cup of coffee within reach in a country famous for its love of tea.
Take a break from the news
From a bittersweet nostalgia trip in Alexander Payne’s The Holdovers to Emma Stone starring in the energy-intensive new movie Poor Things, here is the FT’s list of six films to watch this week.
Additional contributions from Tee Zhuo and Benjamin Wilhelm
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Source: Economy - ft.com
