The confidence barometer has risen – a bit, and depending on whom you talked to at MIPIM this year.
In previous years, you could tell who was in or out of the market by whether they were down in Cannes, but these days it’s more complicated than that. There were lots of no-shows, but for all sorts of reasons, some of which have little to do with market conditions: HSBC and RBS were not there, for example, while the London Mayoral election in May meant Boris Johnson had to skip the south of France this time.
Debt advisers definitely fell into the busy camp, as did anyone stuck into restructuring distressed assets or advising on the quarterly mounting pile of defaulting European CMBS. Lawyers who used to advise on buying and selling properties were busy courting banks and debt buyers and re-inventing themselves as debt experts.
One talking point about distressed debt was whether the recent pick-up in bank sales of non-performing loans would subside, now that the European Central Bank’s long-term refinancing operation has stabilised the banks.
LTRO offered banks three-year loans at a rate of 1%. Lloyds borrowed €13.6bn in the ECB’s second offer at the end of February. There are plenty of people who think LTRO will at least give banks a breathing space, but it doesn’t alter the fact that many need to shrink their overall books to meet tougher capital requirements.
In terms of meeting demand for new debt capital, the big theme is senior debt funds: eight or nine were being talked about, but there isn’t much clarity yet on their precise investment strategies. Clearly though, private equity and institutional fund managers expect to launch senior and stretch senior funds later this year, and no doubt more will emerge.
The private equity fraternity did a lot of smiling and winking when asked about plans to raise new funds this year, which is good news. Bar a handful who were out of the traps early, all the well-known names are at, or close to, the stage of investing capital raised five years ago in the last big capital-raising splurge – and most people believe there are opportunities to invest.
By next year’s MIPIM we will be talking about who has or hasn’t been able to raise new money and the most intriguing ones to watch will be the last bulge-bracket banks standing. Blackstone has left Morgan Stanley and Goldman Sachs in its wake: will they recover now or are they down and out?
The group that seemed least happy were the investment agents, especially firms with big regional teams. The last quarter of 2011 was OK, but not great, with UK volumes supported by several sales of chunky distribution portfolios, and some strong German shopping centres changing hands.
Their concern is that 2012 has started very quietly in terms of deal volumes. Usually at MIPIM there is lots of chat about invest-ments being readied for sale, but that area felt pretty flat this time. The hope is that things will pick up later in the year.