Jonathan Gray, president and chief operating officer of Blackstone Inc., from left to right, Ron O’Hanley, chief executive officer of State Street Corp., Ted Pick, chief executive officer of Morgan Stanley, Marc Rowan, chief executive officer of Apollo Global Management LLC, and David Solomon, CEO of Goldman Sachs Group Inc., during the Global Financial Leaders’ Investment Summit in Hong Kong, China, on Tuesday, November 19, 2024.
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An “industrial renaissance” in the US is driving demand for capital, said Marc Rowan, CEO of Apollo Global Management, at the Global Financial Leaders’ Investment Summit in Hong Kong.
‘There is so much demand for capital, [including through debt and equity] …What is going on is nothing short of extraordinary,” Rowan said during a panel discussion on Tuesday.
This demand is supported by massive government spending, especially in infrastructure, the semiconductor industry and projects under the Inflation Reduction Act, the asset manager said. reportedly in the running for the position of Secretary of the Treasury under newly-elected President Donald Trump.
“What we’re seeing is this incredible demand for capital that’s happening against the backdrop of a U.S. government that’s running significant budget deficits. And so I think raising capital is going to be a good thing,” he said.
Industrial policies, including the CHIPS and Science Act and the infrastructure legislation of 2021, justify billions in spending.
Rowan added that the US has been the largest recipient of foreign direct investment for the past three years and is expected to remain in the top spot this year.
Rowan and other panelists also mentioned energy and data centers – needed for artificial intelligence and digitalization – as growth sectors that require more capital.
Blackstone President and COO Jonathan Gray told the panel that data centers were the biggest issue across his business, at the company billions in service on their development.
“We do it with equity, we do it with financing… this is a space that we really love, and we will continue to do everything we can when it comes to digital infrastructure.”
Fundraising and recovery from mergers and acquisitions
Other panelists at the summit hosted by the Hong Kong Monetary Authority said capital raising was well positioned to recover from a recent slowdown.
According to David Solomon, chairman and CEO of Goldman Sachs, capital raising activity had reached peak levels in 2020 and 2021 amid the massive Covid-era stimulus measures, but was later dampened by the war in Ukraine, inflationary pressures and tighter regulations from the Federal Trade Commission.
There has been a recent uptick in activity as conditions have normalized, along with expectations of friendlier dealmaking regulations from the FTC under the incoming Donald Trump administration, Solomon said.
While there is still an inflationary backdrop and other risks in the current environment, Morgan Stanley CEO Ted Pick says the consumer and business worlds are “in generally good shape” as the economy continues to grow.
“This environment was one where, if you’re in the business of allocating capital, it’s been great,” he said, adding that the group was now preparing to get into “capital raising mode.”
“That’s it [the] characteristic of a growing and flourishing economy, where traditional underwriting and M&A activities are taking place,” he said.
Solomon predicted that these trends would lead to “more robust” capital raising and mergers and acquisitions in 2025.