World’s Best Investment Banks 2019: Equities

J.P.Morgan took the top spot in a year when confidence in North America was balanced by uncertainties in other regions.

J.P. Morgan takes the title Best Equity Bank globally for the second consecutive year on record-breaking results. The New York financial giant’s corporate and investment bank reported revenues climbed 5% in 2018 to $36.4 billion and net income jumped 11% year over year to $12 billion.

The investment banking unit boosted its return on equity to 16% and gained market share, J.P. Morgan Chase said in a February report. Year over year, market share grew 0.5%, bringing the bank’s gain from 2014 to 2018 to 1.6% for total market share of 8.7% on an industry wallet of $80 billion: its highest since 2009. Equities held 11.2% share on a wallet of $63 billion.

J.P, Morgan attributed the impressive results to having strengthened its global leadership across businesses. In 2014, it was the top bank in eight out of 24 businesses; by 2018, it was first in 16 categories, including equity capital markets, global equities, and equity derivatives.

“Despite a challenging quarter, we grew markets revenue in the investment bank for the year with record performance in equities and solid performance in fixed income,” Jamie Dimon, chairman and CEO, said upon the release of fourth-quarter earnings. “Investment banking fees were a record for the year, driven by strength in both CIB [corporate and investment banking] and commercial banking.”

Among regional winners, Bank of America Merrill Lynch (BofAML) emerged as Best Equity Bank in North America, having originated about 200 deals for some $100 billion raised across all equity and equity-linked products.

BofAML grabbed a 10.1% share of the North American market for initial public offerings–the top spot–by pricing 71 IPOs for $35 billion in total proceeds raised. In the U.S. alone, the investment bank held top market share at 11%, pricing 58 IPOs for U.S. issuers for $25 billion raised. The Charlotte, North Carolina bank’s largest IPOs by value were AXA Equitable Holdings, for $3.2 billion; PagSeguro Digital, for $2.6 billion; iQIYI, for $2.4 billion; and Elanco Animal Health, for $1.7 billion

Looking forward, BofAML expects equity market fundamentals to remain strong along with investor confidence. Other trends the bank anticipates in 2019 include strong corporate buybacks, and the U.S. maintaining its position as global investors’ market of choice.

BofAML is also looking forward to a robust 2019 IPO pipeline, as some of the most highly anticipated companies expected to go public include Uber, Lyft, Airbnb, and Pinterest, according to a company spokesperson. These four well-known brands are expected to account for more than $130 billion of market cap, the spokesperson says

Among potential headwinds, BofAML cites fears that the Federal Reserve may change policy on interest rates, an escalation of trade wars, and geopolitical concerns such as Brexit and, of course, another market selloff.

Thailand ‘s Siam Commercial Bank was named Best Equity Bank in the Asia-Pacific region after a most productive 12-month period. From fourth quarter 2017 to third quarter 2018, SCB originated seven deals including two IPOs, a REIT conversion, an equity rights offering, an accelerated global transaction, and two REIT and infrastructure fund follow-on offerings.

The two IPOs were Gulf Energy and Shreit, a REIT. Gulf Energy was Thailand’s largest IPO in 2017, raising $734 million. SCB’s largest deal overall was a follow-on offering for the Digital Telecommunication Infrastructure Fund, at $1.7 billion. The total value of all seven deals was $3 billion.

”We have in-depth knowledge and a very deep understanding of REIT and infrastructure funds. These will dominate the entire Thai market,” said Veena Lertnimitr, executive vice president of SCB’s Primary Distribution Division. “We also have a very strong distribution network.”

Lertnimitr expects the Thai market to be volatile in 2019, in part due to external factors including the U.S. trade war with China. “Foreign fund flows could be a key factor in terms of volatility, even though the market is not in a super bullish mode,” she says. “Last year, IPOs slowed down and were delayed. Right now, we see the visible pipeline will be quite large at about 200 billion baht, as opposed to 80 billion baht last year and 140 billion baht in 2017.”

Brazil’s BTG Pactual takes the Best Investment Bank award for Latin America, having participated in 15 equity offerings in 2018, including six IPOs. The total value of the six was $4.7 billion while the secondary offerings totaled $2.7 billion. This gave BTG Pactual a 28% share of Latin American equity capital markets in 2018 by number of deals.

The bank’s largest IPOs were StoneCold, which listed on NASDAQ; Hapvida Participacoes e Investimentos, which listed in Brazil; and Fibra E, on the Mexican stock exchange.

Looking back, “2018 a very awkward year, with Brazil in a lull until the [October] elections,” says Fabio Nazari, BTG Pactual’s managing director for ECM. “There were a lot of expectations, but no investors wanted to put money of any size to work.”

Pension reform is still top of mind with many investors contemplating Brazil’s fiscal and economic future, Nazari says, and until a deal is clinched, “investors are still in standby mode. We may see IPOs skewed to the second quarter or second half of the year, but I expect 10 to 15 IPOs this year.”

What I see is that this could be the healthiest moment for Latin American capital markets in 10 years. I can see 100 new companies listed in Brazil in the next four years.”

In a market dominated by large industrial IPOs and growth/technology transactions, UBS took the prize for Best Investment Bank in Western Europe. Overall, however, 2018 was challenging for European capital markets, due to increased volatility stemming from geopolitical concerns that included Brexit, new U.S. tariffs, and an uncertain EU growth outlook.

“Investors continued to be selective, favoring large or high-growth deals. Emerging markets and midsized transactions were more difficult,” says Gareth McCartney, global head of equity syndicate at UBS. “This year, we expect more of the same. The optimistic view is that some geopolitical concerns become less of an issue as we get more clarity on Brexit and tariffs.”

Most 2018 IPO action consisted of large deals in Germany and Switzerland, and McCartney expects more of the same this year. However, he also expects more activity in emerging European markets.

For the Central and Eastern European region, Kazakhstan-based Halyk Bank took the honor as Best Investment Bank. Capital markets are still in the early stage of development in the region, however. In 2018, the Kazakhstan Stock Exchange saw just two offerings.

“Kazakhstan’s equity market cannot be characterized as developed, making on average just one public offering per year,” says Farkhad Okhonov, deputy chief executive at Halyk.

Large-cap deals are scarce; the market is still typified by small offerings between $1 million and $20 million. “Prior to Kazatomprom’s $450 million offering last year, the most recent large-cap dual listed IPO was that of Kcell, for $525 million in 2012,” Okhonov says. Kazatomprom is the world’s largest producer of natural uranium.

Deal size may be changing, if slowly. In 2019, Okhonov expects to see two large-cap IPOs coming to market, for local telecom giant Kazakhtelecom and national airline company Air Astana.


Global J.P. Morgan
North America Bank of America Merrill Lynch
Western Europe UBS
Central & Eastern Europe Halyk Finance
Asia-Pacific SCB
Latin America BTG Pactual
Middle East First Abu Dhabi Bank
Africa EFG Hermes