Pricing risk in a two-currency deal

This note sets out how we currently think about currency risk allocation in cross-border consideration, based on the mandates we are running and the conversations we are having with counterparties across Cairo, Riyadh and Geneva. It is a working view rather than a research product, and it will change as conditions do.

The first observation is that pricing and process discipline have diverged. Sellers are still anchored to valuations set in a cheaper capital environment, while buyers are underwriting to a cost of capital that has not meaningfully retreated. Most failed processes we see are not failures of demand; they are failures to reconcile that gap early enough to matter.

The second is structural. Cross-border transactions in our corridor rarely fail on commercial logic. They fail on governance readiness, on currency and repatriation mechanics, and on diligence standards that were never explained to the seller before the process began. Those are solvable problems, but only if they are addressed before a counterparty is in the room.

The work that determines the outcome usually happens before the process formally begins.

Our practical advice to shareholders is unchanged: decide what would make the transaction genuinely worth doing, test that against a small number of credible counterparties, and be prepared to stop. A disciplined process that does not complete is a better outcome than a completed one negotiated from a weak position.

We are happy to discuss any of this in confidence. Every conversation begins with a partner.