Jonathan Gray, president and chief operating officer of Blackstone Inc., from left, 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, chief executive officer Goldman Sachs Group Inc., during the Global Financial Leaders’ Investment Summit in Hong Kong, China, Tuesday, November 19, 2024.
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The “industrial renaissance” in the US is driving the demand for capital, Marc Rowan, CEO of Apollo Global Management said at the Global Financial Leaders’ Investment Summit in Hong Kong.
“There’s a lot of demand for capital, (including through debt and equity) … What’s happening is nothing short of extraordinary,” Rowan said Tuesday during a panel discussion.
This demand has been supported by a large amount of government spending, especially in infrastructure, the semiconductor industry and projects under the Inflation Reduction Act, said the asset manager, who was reported to be in the position of Secretary of the Treasury under President-elect Donald Trump.
“What we are watching is the extraordinary demand for the capital happening against the background of the US government that is running a significant deficit. And for the capital to raise business, I want to be a good business,” he said.
Industry policies, including the CHIPS Act and the Science and Infrastructure Act of 2021, guarantee 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 at the top this year as well.
Rowan and other panelists also identified energy and data centers – needed for artificial intelligence and digitization – as growth sectors that need more capital.
Blackstone President and COO Jonathan Gray told the panel that the data center is the biggest theme in the entire company, with the company spending billions on its development.
“We are doing it in equity, we’re doing it financing … this is a place we are very happy, and we will continue to be everything as it relates to digital infrastructure.”
Fundraising and M&A recovery
Another panelist at a summit organized by the Hong Kong Monetary Authority said capital raising was well-positioned to recover from the recent downturn.
According to David Solomon, chairman and CEO of Goldman Sachs, capital raising activity has reached its peak in 2020 and 2021 amid massive Covid-era stimulus but has since muted amid the war in Ukraine, inflationary pressures and tighter regulations from the Commission Federal Trade.
There is some new activity as things normalize, along with expectations of friendlier regulation of dealmaking from the FTC under the incoming Donald Trump administration, Solomon said.
While there is still a backdrop of inflation and other risks in the current environment, Ted Pick, CEO of Morgan Stanley said that the consumer and corporate community is “largely, doing well” as the economy continues to grow.
“This environment has become one where, if you’re in the business of capital allocation, it’s very good,” he said, adding that the group is now ready for “capital raising mode.”
“This is a characteristic of a developing and emerging economy, where underwriting business and classic mergers and acquisitions are taking place,” he said.
Solomon predicts that this trend will lead to “stronger” capital raising and M&A activity in 2025.
