Investment Management

  • strict warning: Non-static method view::load() should not be called statically in /home/swisseco/www/sites/all/modules/views/views.module on line 879.
  • strict warning: Declaration of views_handler_filter::options_validate() should be compatible with views_handler::options_validate($form, &$form_state) in /home/swisseco/www/sites/all/modules/views/handlers/ on line 0.
  • strict warning: Declaration of views_handler_filter::options_submit() should be compatible with views_handler::options_submit($form, &$form_state) in /home/swisseco/www/sites/all/modules/views/handlers/ on line 0.
  • strict warning: Declaration of views_handler_filter_boolean_operator::value_validate() should be compatible with views_handler_filter::value_validate($form, &$form_state) in /home/swisseco/www/sites/all/modules/views/handlers/ on line 0.
  • strict warning: Declaration of views_plugin_row::options_validate() should be compatible with views_plugin::options_validate(&$form, &$form_state) in /home/swisseco/www/sites/all/modules/views/plugins/ on line 0.
  • strict warning: Declaration of views_plugin_row::options_submit() should be compatible with views_plugin::options_submit(&$form, &$form_state) in /home/swisseco/www/sites/all/modules/views/plugins/ on line 0.


Our Service

We provide investment advice and services to a wide range of clients, from individuals to institutions, helping them protect and grow their capital to meet their long-term financial goals.


Our Finance & Banking Division offers unsurpassed financial advisory and capital-raising services to corporations, organizations and governments around the world.


Our Risk Management division offers advisory on issues related to project finance, public-private partnerships, project appraisal and valuation, risk allocation, debt management, interest-rate and currency risk hedging, credit enhancement, regulation and privatization.


Our  Investment banking team provide capital-raising services, which, in turn, enables our clients to achieve their strategic goals.






M&A: An Indispensable Growth Engine That Needs To Evolve

September 30th, 2014

The environment remains compelling for M&A activity, with announced volumes already up 20% this year.


Huge cash buffers, together with cheap and plentiful financing, are fuelling a merger and acquisition boom that has delivered sizeable windfalls for investors. To sustain these gains, however, real economic growth will need to materialize from what, at least so far, remains a phenomenon dominated by financial engineering, and mostly short-term objective maximization.


Companies are turning to acquisitions amid a struggle to grow organically.


Mergers aim to cut costs and grab market share.


Domicile relocations after mergers are moving capital abroad.


The Market Dynamic

After a hyper-cautious period triggered by the trauma of the 2008 global financial crisis, companies are increasingly putting their record cash holdings to work- so much so that the herd instinct has shifted from prudent accumulation to concern about being seen to be just sitting lazily on cash.


The result is an accumulation of M&A activity that could end this year double that of last year and approximating a level last seen in the boom days of 2007. And, judging from recent deal announcements, not even the derailment of big acquisitions acts as much of a deterrent.


The great enabler is the multiyear string of strong corporate profitability achieved through a combination of higher revenue, improving productivity and substantial cost savings. According to data from the US commerce department, at $1.7tn, after tax corporate profitability in 2013 amounted to a record share of GDP. Given developments so far this year, the 2014 levels are likely to be even higher.


The Twin Pillars of the Current M&A Boom

Investing cash reserves

Initially, a significant portion of the record earnings was retained and deposited in bank accounts by boards and chief executives still traumatized by the 2008-09 near-death experience caused by the credit squeeze that ensued. But with ultra low interest rates depressing the income earned on this cash, companies found it increasingly difficult to resist calls for better deployment of record cash reserves.

As activist investors put even greater pressure on managements, companies started giving more money to shareholders through higher dividends and stepped up share buybacks. More recently, they have also engaged on an M&A boom, taking advantage of two other important enablers: readily available loan and bond financing and cheap borrowing terms.

As powerful as these enablers have been, they are yet to trigger the scale and scope of activities that materially improve the overall prospects for the economy and increase overall prosperity. Specifically, the corporate motivations underpinning the M&A boom have been much defensive than offensive.

Very few deals have been driven by ambitious and realistic expansion plans, rather they are motivated by the desire to squash competition, especially that coming from smaller companies that do not benefit as much from cheap financing and ample cash, or by “inversions” that allow companies to reduce tax liabilities through a change in legal domicile. As such, the resulting economic gains for society pale in comparison to the financial gains that materialize for two particular groups.


Consolidating gains

First, are the facilitators of deal making. These teams of investment bankers, lawyers and accounts walk away with substantial fees and business referrals.

Second, financial investors whose gains are ranked as follows, starting with those earning the most (i) shareholders in companies that are being taken over at a significant premium to their market prices and, sometimes, to almost all conceivable measures of their net present value because they allow for gains elsewhere; (ii) skillful M%A arbitrageurs who capture the value convergence between acquiring companies; (iii) the equity market as a whole, which benefits immediately and directly from higher demand emanating from the accelerated infusion of corporate cash and the rise in debt issuance.


Key Implications for Investors

  • Regardless of the pace of merger activity, economic growth is likely to pick up speed in the second half as headwinds from an abnormally cold winter abated.


  • Heavy merger activity will continue, especially in sectors where economies of scale are ripe for the picking, such as metals and mining.


  • Mergers can be shareholders friendly when they are accretive to earnings, but they’re yellow flag for corporate bonds because of the balance-sheet resources that mergers use.








Sample Presentations


(Client Area)

Access to the full article is restricted to Swiss Global Economics clients only.


  • Do big acquisitions make financial and strategic sense?
  • Bond Investors: Making the right allocations amid confusing signals.
  • The end of Quantitative easing: What is in store for US treasuries?
  • Global Banking: A sustainable model for a sustainable level of returns to shareholders.
  • Rethinking Central Banking: The need for an alternative framework and international coordination.