The Franco-American investment bank suffered from market volatility at the end of the year. But it benefits from an exceptional 2018 vintage for mergers and acquisitions.
The exceptional vintage of mergers and acquisitions last year enabled Lazard to offset the effect of the turbulence in the equity markets at the end of the year, which weighed on its asset management business.
The Franco-American investment bank, whose revenues are shared between advice and asset management, suddenly posted stable revenues at $ 685 million in the last quarter of 2018, and up slightly over the year, to $ 2.7 billion (+ 4%), reflecting the combined effect of an increase in consulting and a decline in management.
“Good start” in asset management
« We advised five of the ten biggest M&A deals last year ”, said Chief Executive Officer Ken Jacobs on Tuesday, noting that “ the start of 2019 is good in asset management », With a collection of 11 billion dollars at the beginning of the year (+ 5%).
Assets under management stood at $ 215 billion at the end of December, down 14% year-on-year, mainly due to the decline in equity markets. Net income, reduced last year by a charge of $ 420 million related to US tax reform, doubled over the year to $ 527 million.
Towards a “more contrasted” year
The bank, intervened last year on the purchase to 78 billion dollars of the American insurer Aetna by the chain of pharmacies CVS or the acquisition by the American health insurer Cigna of its compatriot Express Scripts for 67 billion dollars , anticipates a more contrasted year in 2019 in mergers and acquisitions.
« The environment in the United States remains constructive and the level of confidence of the leaders is good, Ken Jacobs explained. But we can sense greater concern in the earnings forecasts, even if no one is banking on a recession in 2019, or even in 2020. ».
Uncertainties in Europe
The European market risks being penalized by the uncertainties surrounding Brexit, while in France, “ the environment has changed since last year ”, he continues. “It is not certain that [les récents événements politiques] have an effect on mergers and acquisitions carried out by French companies, the question is more that of foreign investment in France ”.
Lazard, who had raised the possibility of a sale of its asset management a few months ago, now sees himself more as a consolidator. “ The asset management market is changing dramatically due to the pressure of passive management, explained Ken Jacobs. Lazard is well positioned from this point of view, and could be a buyer ”.