NEWSLETTER of February 18, 2022

The following content has been added at finexpert:

KPMG
PULSE OF FINTECH H2 2021
2021 has been a remarkable year for the fintech market, with a record number of deals in every major region — including the Americas, EMEA, and Asia-Pacific. Fintech investment was incredibly strong, with both VC and PE investment soaring to record highs. The breadth of fintech solutions attracting investment continued to expand and grow, with surging interest in cryptocurrencies and blockchain, wealthtech, and cybersecurity. >more

KfW Research
KFW-IFO CREDIT CONSTRAINT INDICATOR FEBRUARY 2022
KfW Research - Towards the end of the year banks were more accommodating to potential borrowers from the business sector despite the worsening pandemic situation. For SMEs, however, the KfW ifo Credit Constraint Indicator fell only marginally, while large enterprises significantly benefited from easier credit access. Fewer than one in ten large enterprises had recently deplored restrictive lending policies. During the same period, SMEs’ credit demand grew again moderately after five consecutive declines. Compared with the long-term average, however, credit demand remains weak. Omicron and global supply chain disruptions are major adverse factors weighing on investment sentiment which are dampening the associated demand for finance. >more

Coller Capital
GLOBAL PRIVATE EQUITY BAROMETER: WINTER 2021-22
Incentivising a larger proportion of portfolio company employees would lead to higher investment returns, according to almost half of the Limited Partners (LPs) responding to Coller Capital’s latest Global Private Equity Barometer. A mere 6% of investors thought that broadening the incentivisation of portfolio company staff would be detrimental to returns. The pension funds, insurance companies, and asset managers that make up the bulk of the industry’s backers believe strongly in the private equity model – almost 90% of LPs think that most small and mid-cap public companies would benefit from periods of private equity ownership as they grow. And a large majority of LPs also see private equity sponsorship as a positive indicator in assessing the short-to-medium-term prospects of private companies seeking to IPO. >more

KPMG
VENTURE PULSE Q4 2021
Venture capital (VC) investment globally remained strong in Q4’21 — bringing to a close an incredible year. The ready availability of cash, the significant returns seen on exits throughout the year, and the increasing participation of corporates, family offices, and a range of other non-traditional investors has only added to the overall attractiveness of the market. With the rise of the Omicron variant and the return of work-from-home mandates in some jurisdictions or the delay of return-to-office plans in others, the continued pressure to enhance digital offerings and hybrid work environments is expected to remain firmly on the radar of investors across industries. The combination of a strong investment environment and the continued drive for digitalization will likely help keep VC investment high heading into Q1’22. >more

BlackRock
A WORLD SHAPED BY SUPPLY
We are in a new and unusual market regime, underpinned by a new macro landscape where inflation is shaped by supply constraints. Limits on supply have driven the surge in inflation over the past year: a profound change from the decades-long dominance of demand drivers. This fundamentally changes how we should think about the macro environment and the market implications. The key to understanding the muted response of central banks to inflation is not the timeframe but its cause: supply. Much of the 2021 debate overlooked this. >more

PEER SELECTION AND VALUATION IN MERGERS AND ACQUISITIONS
Gregory W. Eaton, Feng Guo, Tingting Liu, and Micah S. Officer
2021
Using unique data, this paper examines investment banks’ choice of peers in comparable companies analysis in mergers and acquisitions. We find strong evidence that product market space is amongst the most important factors in peer selection, but we provide evidence indicating that Standard Industrial Classification (SIC) codes, particularly three- and four-digit codes, do a poor job of categorizing related firms in this setting. Banks strategically select large, high growth peers with high valuation multiples, factors that are also positively related to premiums. Our evidence is consistent with target-firm advisors selecting peers with high valuation multiples to negotiate higher takeover prices. >more
 

WHY DID SMALL BUSINESS FINTECH LENDING DRY UP DURING MARCH 2020?
Itzhak Ben-David, Mark J. Johnson, and René M. Stulz
2021
With the onset of the COVID-19 crisis in March 2020, small business lending through fintech lenders collapsed. We explore the reasons for the market shutdown using detailed data about loan applications, offers, and take-up from a major small business fintech credit platform. We document that while the number of loan applications increased sharply early in March 2020, the supply of credit collapsed as online lenders dropped from the platform and the likelihood of applicants receiving loan offers fell precipitously. Our analysis shows that the drying up of the loan supply is most consistent with fintech lenders becoming financially constrained and losing their ability to fund new loans. >more