Lazard 4th-quarter profit more than doubles as M&A activity surges

Investment bank Lazard Ltd reported a 147% surge in fourth-quarter profit on Friday, powered by growth in its financial advisory business as corporate dealmaking activity ended the year on a high.

Lazard, whose business is split between asset management and financial advisory, reported adjusted net income of $192 million, or $1.66 per share, for the quarter, compared with $105 million, or 91 cents per share, a year earlier.

Analysts on average were expecting 97 cents per share, according to IBES data from Refinitiv.

"Generally speaking it was a very strong M&A market both in the third and fourth quarter. I think the year is off to a pretty strong start across the board, both in the US and Europe, and we're seeing quite a bit of activity right now," Lazard Chairman and Chief Executive Kenneth Jacobs said in an interview.

Global M&A activity, one of Lazard's main revenue drivers, roared back to life in the second half of 2020, even though overall dealmaking activity fell to a three-year low as companies grappled with the financial fallout from the COVID-19 pandemic.

"It's really technology-driven disruption across industries that's driving a lot of the activity for most of the companies that have an advantage and those trying to catch up," said Jacobs.

An increase in shareholder activism, a surge in SPAC transactions and companies' considerations around environmental, social and governance (ESG) matters have also contributed to the increased M&A activity, Jacobs added.

Lazard's net revenue for the quarter surged 22% to $878 million and its operating revenue rose to a record quarterly high of $849 million.

Operating revenue from the financial advisory business grew 29% to a record quarterly high of $509 million, while revenue from the asset management arm rose 12% compared with the year-ago period.