Rising economic tides are lifting equity capital markets and buoying our Best Equity Bank winners.
For the first two months of this year, in the United States, initial public offerings (IPOs) stood at $11.9 billion. That was the second-highest IPO volume on record, following a comparable period in 2000 during the peak of the dot-com boom when the total raised was $14.2 billion, according to Dealogic data.
Some hotly anticipated listings are grabbing headlines, and our Best Equity Banks have been active behind the scenes. J.P. Morgan, our Best Equity Bank globally and in Africa, and Goldman Sachs, Best Equity Bank in North America and Western Europe, had the “unicorn” by the horn: Dropbox, a Cloud-computing data-sharing and storage company valued in a prior private offering at almost $10 billion, traded for the first time on March 23. J.P. Morgan and Goldman Sachs were among the largest investment banks to bring Dropbox to market.
Last year, the two banks were neck and neck on the league tables: J.P. Morgan raised $62 billion for its clients in equity capital-markets deals, giving it a total market share of 7%, while Goldman Sachs raised close to $68 billion for a slightly larger share of the pie, according to Dealogic. In Europe, J.P. Morgan and Goldman Sachs were behind the largest healthcare IPO ever: Siemens Healthineers. The medical-technology spinoff listed on the Frankfurt Stock Exchange and raised $4.5 billion. The quality of deals gave J.P. Morgan a slight edge in our selection of winners.
“You’re seeing more broad-based activity as macroeconomic conditions across the globe are looking pretty good,” says James Fawcett, a product director for equity capital markets at Dealogic, in a recorded interview on Dealogic’s website. “It’s not concentrated in one area,” Fawcett said.
Emerging Markets Come Out on Top
One area expected to be hot this year for equity capital markets is Central and Eastern Europe, where IS Investment, the investment-banking arm of Bank in Istanbul, is our regional winner for Best Equity Bank. Investors are looking to Central and Eastern Europe for the growth that can be found in emerging markets, explained Emre Sezan, head of equity research at IS Investment.
Companies are planning a burst of activity in IPOs over a relatively short amount of time, to take advantage of investor interest and favorable timing, Sezan says.
“Raising capital to lower debt positions and to close FX short positions have been important motives for Turkish companies to go for IPOs,” Sezan explains, “and another important motive is strong flows to emerging-market equities in 2017, continuing through the first months of 2018. Companies want to benefit from the positive sentiment toward emerging-market equities and global liquidity.” IPOs in the pipeline at IS Investment include companies in retail, transportation and defense.
In the Asia-Pacific region, regional winner CIMB Investment Bank Berhad has focused on the small, but numerous deals coming to market across Malaysia, Indonesia, Singapore and Thailand.
IPOs on the Rise
CIMB raised about $4 billion for its clients in equity capital markets in these countries, and was involved in four out of the five largest equity deals in Malaysia recently. It also participated in the $610 million cleanup block trade for Bank of Tokyo-Mitsubishi UFJ, which took place in September 2017.
In the Asia-Pacific region, it will likely continue to be quantity over size of deal this year, according to research from consultancy EY.
EY Asia-Pacific IPO leader Ringo Choi stated in a report that last year there was a thriving market in small-cap IPOs as far afield as China, Japan and Australia. “We expect to see this trend continuing into 2018, with IPOs expected to rise in Hong Kong, Japan and the ASEAN region,” he stated.
As the winner for the Best Equity Bank in the Middle East region, First Abu Dhabi Bank (FAB) helped open the IPO market in the United Arab Emirates after a hiatus, with a $1.3 billion equity-capital raise for real-estate company Emaar Development. FAB also helped privatize ADNOC Distribution in Abu Dhabi, in what was the first listing there in six years.
Looking ahead in the Middle East region to later this year or next, all eyes are on what is expected to be the largest IPO ever: the listing of the world’s biggest oil company, Saudi Aramco. Market watchers now say they expect the IPO to come to market in 2019, rather than later this year.
Latin America saw the strongest surge in equity capital markets last year, with a total of $27 billion in volume and a growth rate of more than 160%, according to Dealogic.
Citi, our Best Equity Bank in Latin America, participated in some of the most notable deals in the region, including the IPO of Buenos Aires–based online travel agency Despegar.com, which raised over $330 million on the New York Stock Exchange in September.
Citi also participated in a follow-on $400 million offering from Sao Paulo–based airline Azul, and special-purpose acquisition company Vista Oil & Gas, which completed a $650 million IPO on the Mexican Stock Exchange in August.
In equity capital markets, success in offerings tends to beget continued success, according to capital markets executives polled by BDO USA in its annual BDO IPO Outlook survey. When asked for the factor most likely to influence increased IPO activity this year, 38% of bankers polled cite positive returns from new offerings.
So far, bankers have no reason to alter their optimistic view, says Christopher Tower, a partner in the Capital Markets Practice at BDO USA. “Capital markets executives clearly feel that the growth of the past year will continue in 2018, as they project significant increases in both the number of IPOs and in total proceeds raised,” he wrote in the BDO report.
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BEST EQUITY BANKS 2018 |
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Global |
J.P. Morgan |
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North America |
Goldman Sachs |
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Western Europe |
Goldman Sachs |
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Central & Eastern Europe |
IS Investment |
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Asia-Pacific |
CIMB |
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Latin America |
Citi |
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Middle East |
First Abu Dhabi Bank |
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Africa |
J.P.Morgan |
