Episode 1320: Think Tank: Strategic investors eye chemicals M&A amid bearish organic growth

The chemicals sector M&A market could see the start of a revival this year, with private equity firms and other strategic investors keen to put war chests of capital to work in a muted growth environment, but political and economic factors remain a concern.

In this podcast, ICIS insight editor Tom Brown speaks to Federico Mennella, managing director for industrials at investment bank DC Advisory, about the economic outlook and shifting trends in global chemicals dealflow.

• Rebound still expected but timing has been pushed back towards the end of the year on trade uncertainty, energy pricing and economic stability
• Strategic investors have war chests of cash and are looking to M&A in difficult organic growth environment
• Interest strong for North America chemical sector opportunities due to competitive energy pricing
• Questions over whether a financial investor could do something with Europe assets that the current owner cannot
• Private equity continues to drive M&A
• Increasing trend for bids for assets not in play
• More flexibility in transactions, with investors taking certain assets out of a wider package
• Global M&A activity has remained below pre-pandemic levels in size and volume
• Slight rebound occurring, multiples slightly lower
• Financing costs remain elevated compared to pre-COVID era
• Disconnect between buyers and sellers on valuations narrowing