1- Investors Look to Global Healthcare Market for Long-term Growth, Near-term Safe Haven, Says PwC
2- Threat of Recession Contains Risk of Further Bank Failures
3-Europe’s economic crisis has left real estate investment and development on limbo — little relief expected in 2012: Emerging Trends Real Estate® Europe
4- Istanbul
1- Investors Look to Global Healthcare Market for Long-term Growth, Near-term Safe Haven, Says PwC
30-Jan-2012
PwC Global Healthcare Introduces Quarterly Newsletter on Global Healthcare M&A Trends and Opportunities. 30 Jan 2012– The healthcare sector is well positioned to see an increase in mergers and acquisitions (M&As) globally due to its perceived benefit as a safe haven both in the near and long-term future, according to PwC in its first edition of Global Healthcare Deals Quarterly. In the inaugural issue, PwC states that the healthcare industry will attract an increasing share of deal activity as a result of its strong corporate balance sheets and significant private capital support despite a softer economic outlook in 2012.
Healthcare was the third largest sector for global M&A activity in 2011, displacing finance in the top-three global middle market deal value rankings by Dealogic.
PwC highlights the following three key factors driving expected deal flow:
• Economic resilience, attractive demographic growth, and infrastructure build-out present a relatively safe investment for investors in a challenging macroeconomic environment.
• Within the sector, the declining value of incremental innovation implies a shift from investing in healthcare products such as drugs and medical devices towards technology and services.
• Innovative delivery models that offer better, cheaper, faster healthcare in countries such as Australia, India, and the Middle East are likely to attract new capital.
David Levy, MD, global healthcare leader, PwC, commented:
“Universal themes that drive healthcare markets globally — healthcare reform, increasing competition from new market participants and the appetite for new, more efficient care delivery models — has made M&A an increasingly important growth strategy for our healthcare clients. As healthcare becomes more globalised and investors broaden their geographic focus, PwC has professionals on the ground that can provide both context and connections.”
2- Threat of Recession Contains Risk of Further Bank Failures
29-Jan-2012
‘Banana Skins’ poll identifies top threats to banks. The risk of another global recession and a renewed banking crisis is high according to a new survey of the dangers currently facing the world’s banking industry. The CSFI’s annual Banking Banana Skins survey, produced in association with PwC, puts macro-economic risk at the top of the list of 30 possible risks to banks. The poll is based on responses from more than 700 bankers, banking regulators and close observers of the banking industry in 58 countries.
The poll also shows that anxiety about the outlook for banks is at its highest level since the survey was started 13 years ago. Many respondents expect to see further bank failures and nationalisations.
The main cause of anxiety is the eurozone crisis which contains the threat of sovereign default by several countries. The shock of a euro collapse would hit banks not just in Europe but in all major regions of the world. Bankers in countries as wide apart as the US, Canada, China, Argentina and Australia put the euro crisis at the top of their list of concerns.
The first consequence of a crash would be large credit losses, which appear at No. 2 on the list. But these would be followed by a funding crisis with banks cut off from access to liquidity and fresh capital (No. 3 and 4).
Complicating the picture is the increase in political interference (5) and regulation (6) of the banking industry. Although regulatory initiatives are intended to bring about a solution to the banking crisis, they are also adding cost and distraction to banks, and making it harder for them to supply credit to the economy.
Concern about the ability of banks to manage their way out of the crisis is also high: weakness in corporate governance (9) and risk management (10) are both seen as Top Ten risks. A fast-rising risk is business continuation (up from No. 21 to No. 12), i.e. the ability of the banking system to survive the failure of a major financial institution.
“The picture painted by this survey is very bleak,” said David Lascelles, the survey’s editor. “It shows a fragile banking system beset by major threats and uncertainties.”
Andrew Gray, banking partner at PwC, said: “Banks are clearly worried about the dangers posed by continued turmoil in the eurozone, the threat of a further credit squeeze and uncertainty created by continued regulatory changes.
“Against this backdrop many banks will struggle to generate adequate returns across their business. Banks will be forced to reshape their businesses and further job losses across the sector seem inevitable as banks seek to drive down costs.”
For the first time, the Banana Skins survey shows the risk outlook to be better in the emerging economies than in the industrialised world. Respondents from regions such as Latin America, Africa, Asia and the Far East ranked their prospects more positively than North America and Europe thanks to stronger growth, though they felt vulnerable to global banking shocks. However, the survey also showed mounting concern about the prospects for China as its economy slows and its banks face growing pressures.
3-Europe’s economic crisis has left real estate investment and development on limbo — little relief expected in 2012: Emerging Trends Real Estate® Europe
26-Jan-2012
An economic crisis has left the European real estate industry in limbo, with preferred markets chosen more on their potential as safe havens than high-growth hubs, and with highly specialised non-core investments gaining attention as alternatives to traditional property types, according to Emerging Trends in Real Estate® Europe 2012, the annual industry forecast published by PwC and the Urban Land Institute (ULI).
The report says that the prospects for any turnaround this year hinge on how recent regulatory measures will affect banks’ willingness to make commercial loans, and whether another financial industry collapse caused by sovereign debt issues ultimately triggers a widespread release of assets by banks to investors.
2012 marks the beginning of an era that will be defined by more negatives than positives in its early years, says Emerging Trends, which includes interviews with and surveys of more than 600 leading commercial property professionals across Europe. It predicts that this year, property financing will become a major casualty of the measures banks take to tackle regulatory and macro-economic pressures; deleveraging will not free up capital for fresh property lending; debt will become more short-term and expensive; and the need to find alternative sources of funding will become imperative.
Joe Montgomery, chief executive of ULI Europe, said:
“The profound instability is affecting the providers of equity and debt. We are operating in an environment that is very difficult to model. The uncertainty over the level of banks’ exposure to sovereign debt default, coupled with uncertainty over the regulatory changes introduced as a result, has caused significant elements of the capital markets to be reduced to a state of near paralysis.”
John Forbes, real estate partner at PwC and author of the report, said:
“Debt will be the main story of 2012. There is general pessimism regarding the availability of debt this year, and significantly lenders are the gloomiest of all. “A mere 6% of lenders believe that debt will be as available as it was in 2011, with 42% believing that it will be moderately less available and 52% believing that it will be substantially less. This will be a huge challenge for many, but will create opportunities for others, in particular equity investors less reliant on debt, those who are able to take advantage of the opportunities from bank deleveraging and new debt providers entering the market.
“The good news is that the view of respondents regarding the availability of equity is much more positive. Most promising is the response from institutional investors: 65% believe that equity will be moderately more available, with a further 10% believing that equity would be substantially more available.”
4- Istanbul
Istanbul – For the second consecutive year, Istanbul is ranked first for both investment and development. Its popularity is due largely to its strong economic growth prospects and demographics (a young, growing population). Retail development in Turkey has particularly high potential, with consumer spending on the rise and an influx of major international companies. “Turkey’s appeal is based on a long-term view of the future,” says Emerging Trends.
Munich – Munich ranked second in the survey. With one of the lowest unemployment rates in Germany, Munich’s economy is perceived to have fared well in the recent economic malaise. Its appeal is based on the notion of the city as a safe haven offering a deep and liquid market that is more stable than Frankfurt.
• Warsaw – Ranked third in the survey, Warsaw is viewed more favourably by outside investors than domestic ones. Investors anticipate the city’s increasing prominence as the financial centre for the Eastern European region, boosting the city’s office sector. Its retail sector is also highly favoured, as the city has attracted international retailers. Extremely low retail vacancy rates and limited supply will keep this sector strong.
Berlin – Berlin, ranked fourth, was Europe’s most attractive market for residential investment. Its appeal, like that of Munich, is stability, and its popularity with interviewees reflects a wider search for safety in today’s market environment.
Stockholm – Stockholm, ranked fifth, was another favourite for investors picking safe cities. The city and Sweden overall have impressed investors with a strong performance throughout the financial downturn. It is considered one of the strongest markets in Europe, due to strong public sector finances and a solid export-driven economy.
In addition to Istanbul holding firm as the top investment and development market, the report highlights other trends:
The rise of Moscow as an investment magnet. Of the Russian-based interviewees, 82 per cent anticipate deployment of more capital into real estate this year, and 75 per cent expect profits to rise.
The decline of London in the ratings for new investment, existing investment and development. Respondents cited concerns over the difficulty of obtaining assets, strong competition and pricing on the brink of a bubble.
The likelihood that investment will increase in few of the 27 markets in the survey. Respondents predicted greater investment in a quarter of the cities – Berlin, Hamburg, Istanbul, London, Moscow, Munich and Stockholm – but said capital values and rents would likely hold steady rather than rise as a result of the investment activity.
Respondents from Ireland (“Irish interviewees believe their economy is through the worst”) and Turkey were the most optimistic about business confidence and profitability over the coming months. Least optimistic were respondents from the Czech Republic, France and Portugal.
© 2012 PwC. All rights reserved.
