As background to our Chemicals Mergers and Acquisitions (M&A) Annual Review for 2024-25, Natrium Capital expects slow economic growth globally and chemical industry expansion at levels below long term trends. We also expect continued uncertainty caused by geo-political shifts and an inconsistent approach to environment regulation to have a negative impact on the industry. On the other hand, we expect inflation to remain stable and short term interest rates to continue to fall.
Against this relatively lacklustre backdrop, we are cautiously optimistic that there will be an increase in chemical industry M&A in 2025. We expect a continued flow of smaller and mid-market deals to realign both corporate and private equity (PE) portfolios. On the corporate side, we believe that weak stock market performance and activist investor involvement will lead to change that will likely have M&A implications. On the PE side, investors have built up large ‘dry powder’ capital reserves and are under pressure to deploy this capital, potentially through larger or ‘mega’ deals. Furthermore, PE funds are also under pressure to monetise existing investments. Given all of these factors, Natrium Capital expects 2025 to be an interesting year in M&A.
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