Lazard sees another strong year for M&A after posting record profits

By Manya Saini

(Reuters) -Investment bank Lazard Ltd said on Thursday it expects dealmaking activity to remain robust following a record-breaking year for mergers and acquisitions, after posting earnings well above expectations.

Global mergers and acquisitions topped $5 trillion for the first time in 2021, buoyed by an abundance of cheap capital and sky-high valuations, boosting earnings at Wall Street investment banks and resulting in multi-million dollar paydays for top rainmakers.

That also resulted in Lazard reporting record fourth-quarter and full-year profits.

M&A activity continues to be strong in 2022 despite macroeconomic concerns around inflation that is forcing central banks worldwide to turn more hawkish, which could make dealmaking more expensive, Lazard’s top management said on a call with analysts.

Lazard, one of the top 10 M&A advisors in the world, said it plans to hire more investment bankers this year as it looks to advise on more high-profile deals.

“While volatility may remain elevated, we are encouraged by early signs of market rotation from speculative growth to quality and value,” Chief Financial Officer Evan Russo said.

Lazard reported a 14% surge in operating revenue to $968 million in the fourth quarter. Revenue from its financial advisory unit jumped 20% to $608 million, while its asset management arm revenue rose 3% to $347 million.

The U.S. bank’s adjusted net income rose to $217 million, or $1.92 per share from $192 million, or $1.66 per share, a year earlier. Analysts, on average, had expected earnings of $1.44 per share, according to Refinitiv-IBES.

Shares in Lazard were down 2% in early trading, in sympathy with weaker sentiment in U.S. markets. [.N]

(Reporting by Manya Saini in Bengaluru; Editing by Ramakrishnan M.)