JPMorgan's head of M&A Anu Aiyengar described the volume of transactions above ten billion dollars as astonishing given the geopolitical and economic backdrop. The comment came in an interview published August 30, where she outlined why capital continues to deploy despite interest rates well above the 2021-22 level, persistent inflation, supply-chain disruption and oil-driven commodity pressure.
Financing conditions remain permissive
On the debt side, Aiyengar said the cost of capital remains reasonable and markets are liquid and open. Private credit has undergone what she called an appropriate correction after a period of heavy activity and an influx of new entrants. Strategic buyers are sitting on substantial cash balances supported by strong earnings and cash-flow generation. Most are investment-grade with direct access to credit and bond markets, and they are not leveraging targets to the hilt. For those buyers, financing has not been a constraint.
Sponsor exit bottleneck persists
The picture differs for financial sponsors. Higher yields feed into return calculations, but Aiyengar identified monetisation and exits as the larger hurdle. Private equity firms need to return already-deployed capital and generate distributions for their own investors. With listings still below the levels seen in late 2020, 2021 and early 2022, and more than 30,000 portfolio companies awaiting monetisation, confidence to make new investments wanes when the IPO market is the only visible exit. Take-private transactions have provided an alternative outlet, several of which have closed recently.
Hyperscaler capex creates circular funding loops
The AI infrastructure build-out, data centres, power and chips, may require five hundred billion to one trillion dollars. Hyperscalers are financing this partly on balance sheet and partly off balance sheet through supply agreements and third-party capital. Aiyengar acknowledged a degree of circularity: the ecosystem must succeed for any single participant to recover its outlay. She noted that financings involving Meta or Intel are backed by firms such as Apollo, Blackstone and BlackRock, which underwrite cash flows, guarantees and cushions rather than relying on the hyperscaler's credit alone.
AI spending gets a long leash for now
Companies have no choice but to factor AI's disruptive potential and the risk of non-adoption into valuations. Return on investment remains difficult to quantify; time saved does not automatically translate into headcount reduction. The relevant test is whether efficiency expands the total addressable market or drives incremental sales. Investors have granted companies more latitude on AI capital expenditure than on other investments, without demanding immediate returns. Aiyengar suggested that accountability could tighten by 2027.