Abu Dhabi’s Sovereign Wealth Fund (SWF) ADQ initiated talks in early 2023 to make investment bank Lazard (NYSE:LAZ) private. The move had come in amid the SWF seeking to acquire a Western financial services company. However, with Lazard prioritizing operating independence, the deal could not reach the next step, and both parties walked off, the Financial Times reported.
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In early 2023, Lazard outgoing CEO Ken Jacobs, and ADQ, led by Sheikh Tahnoon bin Zayed al-Nahyan had commenced the acquisition discussions. Now that the discussions have ended, ADQ has declined to comment on them.
Interestingly, Lazard has experienced some troubles recently. In April, the financial house trimmed its workforce by almost 10% amid a freeze in deal-making activity and higher recruitment costs. Additionally, the company’s Q1 revenues came in lower due to a slowdown in M&A activity. It indicated an uncertain outlook and plans to implement cost-saving initiatives for enabling strategic investments in the business. Peter Orszag, an economist and former official in Barack Obama’s administration, has been appointed to take over Lazard’s CEO reins, effective October.
Year-to-date, the stock lost has 5.5%.
ADQ’s Angle For Acquisition
The emirate is looking to diversify from its hydrocarbon industry and foray into the financial services sector. In fact, Abu Dhabi has already made inroads into the world of finance. As part of an investment package for the troubled North African country, ADQ acquired a $911 million stake in Egypt’s Commercial International Bank in 2022. Separately, it has also partnered with General Atlantic to form the largest alternative investment manager in the region for ADQ, IHC, and another Abu Dhabi fund.
Sheikh Tahnoon had also expressed interest in acquiring Silicon Valley Bank’s UK subsidiary in March.
Is Lazard a Buy or Sell?
Of the five Wall Street Analysts covering the stock, three have assigned a Hold, one rates it a Buy, and one gives it a Sell, taking the average consensus analyst rating to Hold. The 12-months price target stands at $37.40, implying a 16.5% upside potential.
In the last month, JMP Securities Analyst Devin Ryan reaffirmed his Buy rating on the stock with a price target of $53 implying a 65.1% upside potential.
