(Bloomberg) -- Ken Moelis said the deal pipeline at Moelis & Co. is at the highest level ever due to significant pent-up demand for mergers and acquisitions after almost two years of Federal Reserve interest-rate hikes.
“I don’t actually believe we needed rate cuts to re-stimulate the M&A market,” Moelis, the investment bank’s founder and chief executive officer, said Wednesday during the Goldman Sachs US Financial Services Conference. “We just needed some stability and no rate cuts.”
Investment-banking activities are likely to pick up next year as investors start to buy companies to fulfill their goals of delivering returns, he said, and sellers start to unload assets they’ve deferred disposing of over the past two years as they waited for a better M&A environment.
“There’s a huge backlog of transactions,” Moelis said.
One of the greatest areas of growth has been private credit, he said. The boom is good for the economy because it helps remove risks from banks and, by extension, taxpayers, Moelis said. Critics of private credit have voiced concerns about the asset class’s low levels of transparency and liquidity.
“This trend is going to continue and going to accelerate because I believe the regulators want it — they should want it,” he said. “It’s good for companies. It’s good for high-risk transactions.”
Moelis also defended his aggressive recruitment of bankers this year amid a dealmaking slump, including from failed Silicon Valley Bank, despite the resulting compensation costs weighing on earnings. “What we did was to take advantage of one of the greatest opportunities of all time,” he said.
Read More: Ken Moelis Scraps CEO Handoff to Seize Once-a-Decade Moment
©2023 Bloomberg L.P.