This- is Exchanges Goldman Sachs, where we discuss developments currently shaping markets industries in the global economy objects Global, have corporate communications here. The firm Today I am delighted to be joined by Pierre Dree, who is the head of our Paris office? We'll talk Pierre about the business landscape and deal environment in France in twenty twenty one and low, but more than that to thanks for joining us Pierre they surrounding Egypt. Garee delighted to be here. picture how's, the french economy been recovering from Cove, it would have been the bright spots and would have been to areas that are low, more challenging. Ok. So french economy is likely to close out, we ve got nine percent decline in GDP. Our forget, Sir, about eight point: five percent- that consensus is at nine point two forces around nine percent. Ivy there's a broad consensus around that number

you ve, been trending in the last months of the year in December, at a seven percent run rate decline. I love you. As you would expect, because weariness or partial lockdown at this point continue strong, dried from travel culture and yesterday, the sectors which are the strong in the French Academy and I've been the hardest hit it. Those of the rights body, We're just highlights number one machine, a sharp improvement versus the first love now. When the train was red down. Thirty percent, so She'd minded seven she's a bit more acceptable number two I think the response has been developed by the french authorities has been quite remarkable, notably hundred thirty billion upstate guaranteed loans, which had the channel through over six hundred fifty thousand companies since the crime, he began to that's, been very effective and then the third point, which is it? the bright spots is really what you seem to live, subdued corporate default trends, which are actually

significantly below two thousand nineteen and showing that these measures taken to cushion the shock created by the virus have been quite effective in terms of the forward expectation is that she be should be turning back to develop Imagine levels at some point in the course of twenty twenty two. But obviously you know this is all aging on decide their situation. You got the UK. I there's a lot of uncertainties still out there. Indeed, too many. uncertainties, unfortunately, so the situation in France compared to what we ve seen across the rest of Europe. I? U summarised what our economy team has been saying, which they just released: a new set of forecast and their views that among the top five european economies Germany will see a large VP decline, in two thousand nineteen, then France and ITALY, leaving it close number three and Spain. UK are really being the hardest said with double digit decline sets the sort of sexual view on Europe

small business, you in the? U S, small businesses, borne the brunt of a lot of the pain of covert how's that picture in France. It's a very contrasted picture, across industries, as can imagine, but I'd see there three reasons: to be optimistic: one small businesses have been really direct beneficiaries of the various safety nets and support mechanisms that have been implemented. When I was, talking about this hundred. Thirty billion abstained guaranteed loans made channel. The economy about forty percent Of these loans were channel to small businesses with less than ten employees, so it's actually been quite effective. From that standpoint. The second point is that We see seen others steep drop in business creation during the first knocked down in their March April and then we're now actually trending at record levels. We are eighty thousand businesses waded every month, which is another level that the country has seen

for a long time, so there is to be hoped there and then the last point: the fund raising for innovation easily above all. This is actually a record year. We have over five million of french direct funding in twenty twenty with Digital Life sciences. Keen tagging several that's up. Seven percent from last year no actually interesting time to be an entrepreneur. So we recently launched art and thousand small Business programme in France you're helping lead that wise France and attractive market for that programme. And what are you hope that ten thousand, while business can accomplish in France, as you know, programme has been in existence for twelve years now in the? U S, new cage and fantastic way to support businesses and job creation in our communities and so the You ve launching it in France that resurfaced back in two thousand nineteen, when we the Goldman Sachs Board in eyes, and we launched

Programme with our partner insects, which is a leading European Business School it late October, twenty twenty- and I was just before the second lockdown- little bit of anxiety around our lunch timing, but the response has been absent: hopefully phenomenal, and it has got on a lot of attention because you know the local stakeholder saying, while government is actually providing support to the french, your pinocchio ecosystem in these troubled times. That's really big vote of confidence on who are french entrepreneurial spirit and where we can cheap. So you know that is progressing the first group of seven judge foreigners that will kick out the programme Marge, started meeting some of them. So it's really exciting time in the whole Goldman Sachs team embarrassed, I can tell you, is very proud that France is the third country where the programme is being rolled out by Goldman Sachs

not rang ten thou small business in your day. Job is an investment banker. What are you seeing in terms of deal activity, especially in the financing side? Among the larger french corporates, I've seen a lot of financing last year was driven by just sheared liquidity needs and survival. But are you start to see some companies look at emanate with iraqi Ivy the first comment here is that the picture is mixed, requested the streets have said that a couple of times that really it's important to emphasise that in industries that were hardest hit by the crisis. You don't travel, is it makes. After all, you see the focus in twenty. Twenty has been on liquidity, building up liquidity, protecting their fortress ban sheets, but I think this will increasingly be that towards trains, any credit, metrics, reducing leverage and just able to be on a sounder footing from capital structure under view aside from liquidity per se

Oh, indeed, were spending a lot of time. We ve covered tides just going through their balance sheets in assessing the full spectrum of options to allow them to do that and that can be caught. Inequity assurance that can be equity, laying the candy hybrid financing, who that cannot we'll be in certain instances no selling businesses at a more aggressive portfolio management strategy to again shore up their equity levels. But for the overwhelming majority of corporate today, there is really a strong appetite to play offence by thinking through there did you got shines and really looking at what can move the needle strategically and just another step for you? Emanate is actually up eight per cent in twenty twenty, versus last year. I am using a lot of cross border about emanated sizes, are five six seven billion range and we definitely I to see more elevated strategic activity levels by the french corporate community this year and habits

The market, the EU s market really took off in the last half of last year. What is the market looked like there and what the outlet for this year It's very interesting because, with a few exceptions, if you look at the past french ideal cycle, that was be dominated by with a few exceptions sponsor, the old corporate car. but the majority of the EU for that we are seeing an when we think about the forward, we see a lot of growth in that market coming from continued corporate coward activity because that's a way for them to create option. I e g in the port, for you too, We are seeing a significant pick up. A deck ideals there's a really strong pipeline of high quality companies that are getting prepared and three something there has been really a phenomenon in the: U S starting to get our shores here is the rise of altered, the jackals so called going pools, etc, which is

certainly getting interest and is also gonna be driver will for that market. So, as their french word for stocks, are we going it's bad that that's too bad now can be applied, for this year. So, finally, beer talk a little bit about abreks. It's happened, talk liberal back, ambitions for the office in Paris as a centre for Goldman Sachs in the post, breaks it world they look at me. Greg said we always knew that, whatever the outcome, we would be able to adapt, but we first I saw that as an opportunity to get closer to our clients looking at the corporates, but also the banks, the insurers, the asset managers offend the offices which are residing in the country. So we In doing that, we have not waited for the breaks it. I've got to start doing that and what we see is really I count doubling over the past three years and we expect it to Dublin again over the next four years.

One of the striking things is that we now have all the divisions now represented on shore and the bears office. She's married I represent decades serving french finds now is increased. Kingly serving as a hub to support continental european guides across a range of activities to that's aversion, exciting development. We haven't amazing team with my two partners, a measure jerry succeed. I need the money a blow leading global markets and a host of really talented individuals All the other businesses of the firm we're gonna be real getting into a new office building next year with a capacity to host three hundred to two hundred fifty seats, so we're on the journey, but the response. From tides. Most importantly, I've been extremely strong are a great one Hopefully we can take our next part gas in the Paris office, because it's nice to see your face but to be even nicer to see you in person. Welcome any thy Jake? As you know, I beg you

much Pierre. That concludes this episode of exchanges. Goldman Sachs. Thank you very much for listening and if you enjoy the show, we hope you subscribe and Apple pie, cats and liberating or comment tuna and later in the week for a weekly markets. date, where leaders round the firm give a quick take on what they're watching in the markets, this podcast was required. On thirty January, fourteenth in the year to them in twenty one. Thank you for listening all price references and market forecasts correspond to the date of this recording this pod cash should not be copied distributed, published or reproduced in whole or in part. The information contained in this package. Does not constitute research or recommendation from any Goldman Sachs Entity to the listener. Neither Goldman Sachs nor any of its affiliates makes any rep innovation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast and any law.

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