Trump’s ambitious oil plans will not derail Russia
It would still be very disruptive to try to embargo Russian oil from the world markets altogether
Donald Trump’s gleeful “Drill, baby, drill” pledge chimes with the idea of weaponising America’s status as the world’s largest oil producer to strip Russia of the oil revenues funding its war in Ukraine. This line of argument usually has two main points: that the US could flood the market with its crude, driving prices lower and pushing out expensive Russian barrels, and that increased US production could make it possible to embargo and sanction Russian oil exports altogether without causing a shortage and sending prices sky-high.
There is already a wave of scepticism among both oil industry analysts and insiders over the viability of the 3-3-3 economic plan announced by the Treasury secretary nominee Scott Bessent. This includes increasing US oil production by 3mn barrels a day, or an energy equivalent, by 2028. The cost structure of shale oil — the main growth engine of US oil production over the past 15 years — is such that, according to the Dallas Fed, oil producers need on average a forecast of $64 a barrel price to drill a new well. Quite a few existing wells would be shut down if the price falls below $50 a barrel. The government might cut some red tape and make more federal land available for drilling, potentially offering opportunities for more prolific wells with a lower break-even price, but those changes would not have a drastic impact.
The irony is that the Biden administration, for all its green measures and talk, has not been too hard on the oil industry, so there is little additional pressure that the Trump administration could remove. Theoretically, it might stimulate additional production by reducing the royalty charged on barrels produced on federal land, but that royalty rate is already much lower than in most of the world. Another possibility would be to offer production-stimulating corporate income tax cuts, but that would contradict other elements of Bessent’s plan. Even if the plan to increase oil production works, its target date of 2028 will certainly not help Trump enact his promise to stop the war in Ukraine during his first weeks in the Oval Office.
Oil production growth in most places — Russia included — is usually the result of activities performed and planned long before the fact, during the fat years. Today, Russia does not have many sources for continuing oil production growth: most new projects have been mothballed since the full-scale invasion of Ukraine in 2022. Russia might even struggle to maintain a plateau once it eats through the inventory of the approximately 1mn-barrel-a-day spare capacity that was taken offline under Opec+ agreements.
But it would not cost much for Russia to maintain a manageable decline of 2-3 per cent a year. By some estimates, the average cost of producing, processing and transporting the oil to export terminals from the existing wells in today’s Russia is $11-$12 a barrel, and $17 a barrel with drilling and development costs within existing fields. That has been creeping up with inflation, but it is mostly rouble-based, so a weakening rouble drives dollar costs lower. Even assuming that the US plan works and the US and Saudi Arabia agree to bring prices below $50 a barrel, it is unlikely that this would make Russia curtail its oil production.
It’s true that the country’s trade balance would suffer in such a situation: a $10-a-barrel change in the export price translates to $25bn a year, but that is less than 7 per cent of total Russian exports and even less than the annual current account surplus now. There will be extra losses from gas trade, as gas prices in Chinese contracts are linked to the oil price, but the volumes are far smaller.
Nor will the hoped-for 3mn barrels per day of additional US production be enough to replace the 7mn currently exported by Russia. As a result, it would still be very disruptive to try to embargo Russian oil from the world markets altogether. That strategy mostly worked with Iran in 2018, but there were only 3mn barrels of export volumes to replace. Russia plays a much bigger role in the global oil markets and there is no quick fix that can change that, even if everything goes according to Trump’s very ambitious plans and campaign trail promises.
Since the beginning of the war, the west has managed to put a dent in Russia’s oil revenues, but it is now struggling to reduce them further. So far, Trump and his associates have not produced a plausible breakthrough strategy for the short to medium term. It is accordingly wise to design plans and strategies regarding Russia around the assumption that its oil revenues remain quite resilient and cannot be drastically reduced.
How Austria’s embrace of the far right could fracture the EU centre
Far right rises
Austria’s far-right Freedom party (FPÖ) appears to be on a glide path to the country’s chancellery, after negotiations among centrist parties collapsed and the moderate conservative People’s party (ÖVP) said it was open to coalition talks.
Any deal would mark the latest major victory for Europe’s far right, and put intense scrutiny on the stance of the EU’s centre-right towards engaging with extremist political groups.
Context: The Eurosceptic, pro-Russia, anti-immigration FPÖ won almost 29 per cent of September’s election, the highest share of the vote. Other parties, including the ÖVP, ruled out working with them and tried to cobble together an alternative coalition. Those talks collapsed on Saturday, with Karl Nehammer resigning as chancellor and stepping down as ÖVP leader.
Nehammer’s appointed replacement Christian Stocker abandoned the party’s cordon sanitaire approach, saying yesterday he was willing to negotiate with the FPÖ. FPÖ leader Herbert Kickl will meet Austria’s president Alexander Van der Bellen today.
Should Stocker strike a deal to become the far-right party’s junior partner, he would put one of the EU’s most uncompromising politicians at the helm of a national government and give him a seat around the EU’s 27-leader council.
Kickl has stark pro-Russian views, has embraced Covid-19 pandemic conspiracy theories and made unsavoury flirtations with Austria’s Nazi past.
Aside from significantly boosting efforts to overturn EU support to Ukraine, sanctions against Russia and existing immigration policies, it would also shine a spotlight on the centre-right European People’s party’s stance towards working with far-right parties.
The EPP, of which the ÖVP is a member, is the largest political group in the European parliament. Its member parties in Germany and Poland are battling far-right rivals in critical national elections this spring, and the party is already under heavy criticism from the assembly’s socialist and liberal groups for teaming up with hard-right groups to win votes.
Stocker may feel he has no choice. A survey released by Austrian tabloid Kronen Zeitung yesterday suggested that if a fresh snap election was called, the FPÖ could poll as high as 37 per cent, with the once dominant ÖVP falling to 21 per cent.
The case for European stocks
America’s S&P 500 is in the midst of an artificial intelligence-led boom. The “Magnificent Seven” tech stocks make up around one-third of the index, and their market capitalisation surpasses the entire value of the French, British and German bourses combined. Tech accounts for around just 8 per cent of the Stoxx Europe 600. AI euphoria has mostly passed the continent by.
But here’s something for perspective. Take Nvidia out of the S&P 500 and its total returns underperform the eurozone’s stock benchmark since this bull market began in late 2022.
There are a few interpretations of this datapoint. First, the S&P 500’s bull run mostly reflects a bet on AI (particularly Nvidia). Second, despite less tech exposure and a slow-growing economy, eurozone stocks have actually performed quite well. (The “S&P 499” still includes the six remaining “Magnificents”).
Charles Schwab’s chief global investment strategist, Jeffrey Kleintop, who flagged the above chart, also points out that the eurozone’s forward price-to-earnings ratio trades at a historic discount to the S&P 500, creating scope for European valuations to rise further.
Either way, European equities clearly have an underlying appeal. Where is it coming from? Goldman Sachs calls the continent’s dominant listed companies “the Granolas”. The acronym covers a diverse group of international companies spanning the pharmaceutical, consumer and health sectors. Together, they account for about one-fifth of the Stoxx 600.
Their performance against the Magnificent Seven has only recently diverged. The S&P 500 — which has around 70 per cent revenue exposure to the US — got a jolt following the election of Donald Trump.
They are no corporate pushovers. Novo Nordisk produces the in-demand Wegovy weight loss drug. LVMH is unrivalled among luxury brands. ASML is a global specialist in chip design. Nestlé is an international food staple.
They didn’t end 2024 well. Novo Nordisk’s latest obesity drug had “disappointing” test results, LVMH is suffering from weak Chinese demand and tough macroeconomic conditions are eating into Nestlé’s bottom line. Still, they are established, broad businesses with global exposure, low volatility and strong earnings — and some are now undervalued.
But Europe is more than the Granolas. Other companies are competitive across sectors, including in tech: Glencore, Siemens Energy, Airbus, Adidas, and Zeiss to name a few.
Small listed European businesses also tend to outperform their American counterparts. About 40 per cent of US small caps have negative earnings, compared with just over 10 per cent in Europe. The winner-takes-all dynamic may be stronger in the US, where tech behemoths suck capital and talent away from smaller companies. (This shouldn’t detract from genuine scaling challenges in Europe.)
European corporates also rely more on relationship-based, illiquid funding, unlike in the US, where listed equity dominates. That may encourage longer-term corporate governance in Europe, but also highlights the challenges of comparing US and European stock performance (the liquid equity flows aren’t in the same league).
Regarding the Trump tariff threat, it’s not all disaster for European companies either. Stoxx 600 groups derive only 40 per cent of their revenues from the continent. (For measure, Frankfurt’s Dax rose close to 20 per cent last year, outperforming European peers, despite Germany’s lacklustre economy.) A stronger dollar would also boost the earnings of European companies with sizeable US sales.
In sum, the stellar returns of the US stock market do not mean that European companies are no good. Rather, investors are willing to pay a premium to get exposure to AI (and Trump 2.0) — one that is looking harder to justify.
...but they are bifurcating based on tariff exposure
Other than the value proposition, there are catalysts that may lure more investors to European stocks: disappointing AI results, lower interest rates in Europe, Trump risks and further stimulus attempts in China.
And, even if its listed companies make a lot of their money outside Europe, there is a domestic upside, too.
First, the European economy has arguably shown agility and resilience in the face of unprecedented shocks, for instance by pivoting away from cheap Russian energy. Total manufacturing production is largely unchanged since the beginning of Trump’s first term (pharma and computer equipment have picked up the slack from car production). So-called peripheral European economies are also performing better.
Then there’s the longer-term domestic earnings and financing outlook. Though France and Germany face political instability, the rising urgency among policymakers to address the bloc’s subdued productivity growth is at least leading to a more encouraging discourse on reforms. There is growing consensus on the need for a true capital markets union to drive scale, deregulation to support innovation, a more pragmatic approach to free trade and China, a debt brake rethink in Germany, investment in digitalisation and lower energy costs. Mario Draghi’s report on European competitiveness has added momentum.
America’s financial, innovative and tech advantage is unquestionable. And whether Europe can actually execute important reforms is another matter. Yet the comparative surge of US stocks — given access to vast liquidity, tech expertise and exposure to AI — hides strengths in Europe’s listed businesses that I, at least, had under-appreciated. The continent has diverse, resilient and international companies with established use cases (while AI is still looking for one). That’s a solid platform for investors to exploit — and for policymakers to build on.
Austria’s new centre-right leader open to coalition with far right
Christian Stocker signalled willingness to share power with Freedom party after resignation of Chancellor
The incoming leader of Austria’s centre right People’s party (ÖVP) has signalled his openness to sharing power with the far right, just a day after Chancellor Karl Nehammer resigned after failing to form a centrist governing coalition.
Christian Stocker, the ÖVP’s general secretary, said on Sunday that he had been nominated as the party’s new head and was willing to enter negotiations with the anti-immigration, pro-Russian Freedom party (FPÖ), which emerged with the most seats in Austria’s national election in September.
Stocker’s statement came after Austria’s president Alexander Van der Bellen announced that he would meet FPÖ’s leader Herbert Kickl on Monday. Observers expect Van der Bellen to ask Kickl to form a coalition government, with centrist parties having previously ruled out such an alliance.
“If we get invited [by the FPÖ to hold coalition talks], we will seriously conduct these discussions like we did in the past with the other parties,” said Stocker, stressing that his party will “face its responsibilities”.
The ÖVP would be the junior partner in any tie-up with the far-right Freedom party, which won 28.8 per cent of the votes in the September election, compared to the ÖVP’s 26.3 per cent.
It was the first time the FPÖ, which has embraced increasingly hardline policies on immigration and the war in Ukraine under Kickl in recent years, had come first in a national election.
The failed negotiations deepened the political stasis in Austria at a time when its economy is at risk of shrinking for a third successive year in 2025. Vienna also faces the prospect of finding between €18bn and €24bn in budget cuts to repair its public finances, according to figures from the EU Commission.
One possibility to break any deadlock would be fresh elections, but that could further strengthen the hand of the FPÖ. One poll for tabloid Kronen Zeitung after Nehammer’s resignation suggested FPÖ would surge to 37 per cent in a snap vote, while the ÖVP would fall to 21 per cent.
Van der Bellen last year tasked the then ÖVP leader and chancellor Nehammer to form a government. Nehammer, who had vigorously ruled out any co-operation with Kickl, resigned late on Saturday after conceding that lengthy negotiations with the Social Democrats had hit a wall.
The 52-year-old, who has served as chancellor since 2021 when his predecessor Sebastian Kurz stood down amid a corruption investigation, had sought to strike a deal to form a centrist coalition with the Social Democrats and the small, liberal Neos party.
In a brief statement to journalists in Vienna on Sunday, the designated new ÖVP boss Stocker acknowledged that he had also been highly critical of the far-right FPÖ in the campaign. But he stressed that circumstances have changed and that all attempts to form a government without the FPÖ failed.
Amazon’s satellite project pushes ahead with UK broadband plans
Filings show Kuiper initiative held meetings with MoD as tech group bids to rival Starlink
Amazon’s satellite operation, Project Kuiper, is pushing ahead with plans to launch a broadband service in the UK, as the tech group founded by Jeff Bezos attempts to take on Elon Musk’s Starlink.
Kuiper is not yet operational, but has previously said it expects to begin deploying its satellite constellation in early 2025 and that it plans to roll out its broadband service later this year. It aims to compete with Starlink in low Earth orbit, a region of space where satellites can provide broadband to areas across the globe poorly served by traditional internet services.
Kuiper needs approval from the UK communications regulator Ofcom to provide broadband services across the country. A final decision on Kuiper’s licence is pending, after a consultation closed in October on Ofcom’s proposal to approve it.
Ofcom said on Sunday that it was “still considering the Amazon application for an Earth Station Network licence to allow Amazon Kuiper to operate terminals in the UK”.
Amazon has also been in talks with the UK Ministry of Defence. Filings show that last year Kuiper discussed a study it carried out on behalf of the UK Space Command. Blue Origin — Bezos’s separate space company — also had a “capability discussion”, according to transparency data published by the government department. The meetings were first reported by the Sunday Telegraph newspaper.
Amazon did not immediately respond to a request seeking comment. The MoD declined to comment.
Meanwhile, SpaceX’s Starlink is operational in more than 100 countries including the UK. A launch of satellite services by Amazon in the UK would follow an increase in demand for Musk’s broadband offering in the country. Ofcom in December reported that Starlink’s service had reached 87,000 connections across the UK — more than double the 42,000 the previous year — with the majority in rural areas.
Starlink’s satellite broadband capacity for the south-east of the country has also sold out. Its website shows it has a waiting list for new connections in a region including London, and stretching from Milton Keynes to Hastings and Andover to Canterbury.
SpaceX did not immediately respond to a request seeking comment.
In its game of catch-up with Starlink, Kuiper must first secure Ofcom’s approval for a licence for certain band frequencies that would enable the delivery of broadband from a constellation of satellites in low Earth orbit.
Ofcom said in September that Kuiper planned to “provide secure, high speed, low latency broadband services to a variety of retail and wholesale customers in the UK” including households, government — such as schools, hospitals and offices — first responders and disaster relief operators.
Kuiper’s planned satellite constellation was at the time expected to launch in the fourth quarter of 2024, with the project already having been beset by delays.
Kuiper is also eyeing direct-to-device satellite services, which would enable consumers to text, call or use data on their mobile phones. Ofcom published in November a call for views on the service, in which Amazon said it was “exploring options” for such a plan.
Kuiper added that direct-to-device services had the “potential to facilitate innovation and improve connectivity, even in the most remote parts of the UK”, and could be “especially valuable in emergency situations occurring outside of the coverage areas of terrestrial systems or following natural or man-made disasters that compromise terrestrial networks”.
Ofcom said on Sunday that it planned to consult on specific proposals to authorise direct-to-device satellite services in mobile bands in the UK early this year. “Subject to consideration of stakeholder responses and our final decisions this could enable such services to be offered to consumers later in 2025,” it added.
--> Elon Musk is standing in the way as Jeff Bezos reaches for orbit
Though the Amazon founder has ground to make up, he is unlikely to be short of customers for his space project
from 02/01/2025
Amazon’s satellite project pushes ahead with UK broadband plans
Filings show Kuiper initiative held meetings with MoD as tech group bids to rival Starlink
Amazon’s satellite operation, Project Kuiper, is pushing ahead with plans to launch a broadband service in the UK, as the tech group founded by Jeff Bezos attempts to take on Elon Musk’s Starlink.
Kuiper is not yet operational, but has previously said it expects to begin deploying its satellite constellation in early 2025 and that it plans to roll out its broadband service later this year. It aims to compete with Starlink in low Earth orbit, a region of space where satellites can provide broadband to areas across the globe poorly served by traditional internet services.
Kuiper needs approval from the UK communications regulator Ofcom to provide broadband services across the country. A final decision on Kuiper’s licence is pending, after a consultation closed in October on Ofcom’s proposal to approve it.
Ofcom said on Sunday that it was “still considering the Amazon application for an Earth Station Network licence to allow Amazon Kuiper to operate terminals in the UK”.
Amazon has also been in talks with the UK Ministry of Defence. Filings show that last year Kuiper discussed a study it carried out on behalf of the UK Space Command. Blue Origin — Bezos’s separate space company — also had a “capability discussion”, according to transparency data published by the government department. The meetings were first reported by the Sunday Telegraph newspaper.
Amazon did not immediately respond to a request seeking comment. The MoD declined to comment.
Meanwhile, SpaceX’s Starlink is operational in more than 100 countries including the UK. A launch of satellite services by Amazon in the UK would follow an increase in demand for Musk’s broadband offering in the country. Ofcom in December reported that Starlink’s service had reached 87,000 connections across the UK — more than double the 42,000 the previous year — with the majority in rural areas.
Starlink’s satellite broadband capacity for the south-east of the country has also sold out. Its website shows it has a waiting list for new connections in a region including London, and stretching from Milton Keynes to Hastings and Andover to Canterbury.
SpaceX did not immediately respond to a request seeking comment.
In its game of catch-up with Starlink, Kuiper must first secure Ofcom’s approval for a licence for certain band frequencies that would enable the delivery of broadband from a constellation of satellites in low Earth orbit.
Ofcom said in September that Kuiper planned to “provide secure, high speed, low latency broadband services to a variety of retail and wholesale customers in the UK” including households, government — such as schools, hospitals and offices — first responders and disaster relief operators.
Kuiper’s planned satellite constellation was at the time expected to launch in the fourth quarter of 2024, with the project already having been beset by delays.
Kuiper is also eyeing direct-to-device satellite services, which would enable consumers to text, call or use data on their mobile phones. Ofcom published in November a call for views on the service, in which Amazon said it was “exploring options” for such a plan.
Kuiper added that direct-to-device services had the “potential to facilitate innovation and improve connectivity, even in the most remote parts of the UK”, and could be “especially valuable in emergency situations occurring outside of the coverage areas of terrestrial systems or following natural or man-made disasters that compromise terrestrial networks”.
Ofcom said on Sunday that it planned to consult on specific proposals to authorise direct-to-device satellite services in mobile bands in the UK early this year. “Subject to consideration of stakeholder responses and our final decisions this could enable such services to be offered to consumers later in 2025,” it added.
There’s a Traffic Jam Forming at U.S. Rocket Launchpads
The nation’s busiest spaceports are fielding record demand, spurring new efforts to develop launch sites in landlocked states and even at sea
A traffic jam is forming at U.S. rocket-launch sites.
Elon Musk’s SpaceX and other rocket companies are planning to increase flights in the years ahead as they ferry their own satellites or payloads for other customers to space.
The problem: Only three sites in Florida and California handle most U.S. rocket launches, and those locations are expected to become increasingly congested as companies and regulators schedule more missions.
Last year marked a record in U.S. spaceflight with 145 launches reaching orbit, or five times as many as 2017, according to data from astrophysicist Jonathan McDowell, who closely tracks space activities. SpaceX—the world’s top rocket launcher—conducted 134 of that total.
Government officials and industry executives fear that backed-up launch sites would restrict payloads from getting to space in a timely manner. A significant weather event or an accident could put one of the major spaceports out of commission for months or even years, said George Nield, the former top space official at the Federal Aviation Administration.
“We’re so dependent on space, to put all your eggs in one basket is a risky strategy,” he said.
Operators of smaller and nascent spaceports, including those in landlocked states and at sea, are jockeying for new business, but face their own set of expansion hurdles.
‘Ready to move’
For decades, rocket launches were relatively rare and there was little appetite for creating new sites. The most prominent locations then and currently are tied to military bases and the National Aeronautics and Space Administration’s Kennedy Space Center.
Multiple spaceport operators are now trying to take advantage of the crunch forming at the main sites. The Pacific Spaceport Complex, located on Alaska’s Kodiak Island, has never seen more than three rocket launches in a year.
Still, it is seeking federal clearance to launch up to 25 times annually, and its forecast for flights five years out is already starting to fill up, said John Oberst, the chief executive of Alaska Aerospace Corp., which oversees the Kodiak spaceport. The facility is looking to coax smaller rocket companies affected by congestion to its launchpads, Oberst said.
Launches can’t just occur anywhere. Rockets are typically sent up from coastal areas, where vehicles soar over water and avoid the risks of flying above populated areas.
Developing new launch facilities along coastal areas is difficult, as locals often worry about disruptions and noise. A proposal to develop a new launch site along the coast in southeast Georgia unraveled a couple of years ago amid public opposition.
Nearly two decades ago, a spaceport in Oklahoma became the first inland site to receive an FAA license for plane-based spaceflights, where an aircraft would ferry a rocket to a high altitude before the rocket detaches to fly to space. The site has yet to conduct a launch. Officials at the spaceport have commissioned a study to determine how to safely launch rockets over land.
“There has to be a first mover, and we’re ready to move,” said Bailey J. Siegfried, vice chair of the Oklahoma Space Industry Development Authority’s board of directors.
Tom Marotta founded the Spaceport Company in 2022 to swallow up rising launch demand. His idea: launches from boats in the ocean. The Boeing Sea Launch System, an international collaboration that launched a couple dozen times from an old floating oil rig, provided a blueprint, he said.
Launches can’t just occur anywhere. Rockets are typically sent up from coastal areas, where vehicles soar over water and avoid the risks of flying above populated areas.
Developing new launch facilities along coastal areas is difficult, as locals often worry about disruptions and noise. A proposal to develop a new launch site along the coast in southeast Georgia unraveled a couple of years ago amid public opposition.
Nearly two decades ago, a spaceport in Oklahoma became the first inland site to receive an FAA license for plane-based spaceflights, where an aircraft would ferry a rocket to a high altitude before the rocket detaches to fly to space. The site has yet to conduct a launch. Officials at the spaceport have commissioned a study to determine how to safely launch rockets over land.
“There has to be a first mover, and we’re ready to move,” said Bailey J. Siegfried, vice chair of the Oklahoma Space Industry Development Authority’s board of directors.
Tom Marotta founded the Spaceport Company in 2022 to swallow up rising launch demand. His idea: launches from boats in the ocean. The Boeing Sea Launch System, an international collaboration that launched a couple dozen times from an old floating oil rig, provided a blueprint, he said.
Companies have tussled over control of pads at busy spaceports.
SpaceX has conducted its launch ramp-up largely from Florida, and is working to bring Starship—the name of the powerful vehicle it is developing—to the Kennedy Space Center and an open pad within the Space Force’s Cape Canaveral base.
Rivals have raised concerns about those plans, including potential congestion the huge rocket might cause. SpaceX didn’t respond to a request for comment.
Centerview Partners Considers a Deal of Its Own After Record Year
The boutique bank, long seen as a holdout, could sell a stake after recent interest from big investors
Centerview Partners has long been seen as a holdout on Wall Street as one of the only boutique banks that hasn’t gone public or taken outside money.
That could finally change.
The firm is becoming more open to exploring its options, Centerview co-founder Blair Effron suggested in a recent interview. Those could include selling a stake in the firm to an outside investor or going public.
Centerview has recently received interest from big investors, people familiar with the matter said.
This comes after Centerview booked record revenue in 2024. The stocks of its publicly traded rivals including Evercore and PJT have surged in the past few years and jumped further on the expectation dealmaking will rebound under President-elect Donald Trump.
A transaction could also assuage Centerview’s roughly 80 partners, including a handful who are near or past the age of 60 and would likely welcome an opportunity to sell shares.
Centerview booked roughly $1.9 billion of revenue in 2024, up from $1.5 billion the prior year. The company’s revenue has increased every year except one since its 2006 founding.
Centerview is best known for its dominant healthcare deals franchise and its founders’ long track records advising clients in the consumer-goods sector. The firm also punches above its weight in other areas, such as industrials and media and entertainment. Close to 30% of the firm’s revenue today comes from general advisory, rather than deals.
“I never wanted to think about anything around monetization until the firm was broad enough to be stable enough, irrespective of the environment,” Effron said from the firm’s Midtown Manhattan headquarters. “I feel comfortable that that is no longer a concern.”
Still, Effron and his co-founder, Robert Pruzan, cautioned that the newfound stance doesn’t guarantee the firm will do a deal soon, especially given that the firm is doing well as is.
“It’s going to be a high bar,” Pruzan said.
Effron, 62, and Pruzan, 61, jointly control the firm. In spring 2023, Centerview elevated Eric Tokat, a rainmaker in biotech dealmaking, and Tony Kim, who has advised on many of the firm’s biggest deals, as co-presidents. The move clarified the firm’s succession plans and laid the groundwork for changes ahead.
Boutiques on the rise
Centerview’s boutique-bank peers were handsomely rewarded in the public market last year, partly because their focus on advisory work makes them a straightforward way to invest in an anticipated dealmaking uptick.
Shares of Perella rallied over 90% in 2024, Evercore shares rose more than 60% and PJT shares rose about 55%. (The run-up in PJT’s shares made its founder, Paul Taubman, a billionaire, the Financial Times reported.) Shares of Lazard, Houlihan Lokey and Moelis also surged.
If Centerview traded at a multiple similar to that of its rivals, it could command a valuation of as much as $10 billion.
Boutiques have been taking a bigger slice of Wall Street’s fee pool, too, raking in the second-highest share of M&A advisory fees in the U.S. in 2024 after 2020, according to data from LSEG. As a group, they took 38% of M&A advisory fees in 2024. And Centerview had the largest share of the U.S. boutiques, with 5.35% of M&A advisory fees.
Centerview ranked fourth among all the banks for U.S. M&A revenue in 2024, trailing JPMorgan, Goldman Sachs and Morgan Stanley, according to Dealogic.
The bank also says it is the most productive, with the highest revenue per employee of its peer set.
One criticism of the firm—and a factor that could complicate any plan to go public—has been its heavy reliance on healthcare, which accounts for a disproportionate share of the firm’s revenue. Centerview’s healthcare team, spearheaded by Alan Hartman, Mark Robinson and Tokat, rarely misses a major deal in the sector.
The firm also has some notable areas for improvement, including the all-important tech sector.
Pruzan said the business isn’t overly reliant on any one industry. He emphasized its work on corporate restructurings, counseling special committees, as well as a recent string of media-and-telecom deals, which included advising Paramount Global’s special committee on its merger with David Ellison’s production company Skydance.
Centerview also advised Capital One on its more than $35 billion acquisition of Discover Financial Services, 2024’s largest deal, and worked on some of the biggest activist situations, including at Disney, Starbucks and Honeywell.
Both Effron and Pruzan are expecting another banner year for the business in 2025. “There’s a level of optimism that I see everywhere and I really think it’s justified,” Effron said.