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 Fewer companies came to market, as investors were less keen to
participate in steep valuations brought on by rising stock markets,
and private equity funds found themselves with little left to sell
after a frenzy in 2014.
Money raised from flotations, or initial public offerings (IPOs),
fell a fifth to $37.2 billion, Thomson Reuters Equity Capital
Markets (ECM) data showed.
"The market has progressed quite a bit and that has meant some ...
valuations have moved up to levels that not everyone wants to
participate in," said Josef Ritter, co-head of EMEA ECM at Deutsche
Bank.
With the FTSEuroFirst300 for instance up more than 16 percent this
year, high stock markets have encouraged secondary share sales,
where an owner such as a private equity firm sells a stake in a
public company.
Such deals rose by a third year-on-year to raise $168.4 billion, or
73 percent of activity, although many offerings had mixed results,
as overconfident pricing by some banks left them sitting on sizeable
stakes.
However, follow-ons are valuable league table currency. Goldman
Sachs and UBS were boosted by their 7.5 billion euro ($8.1 billion)
capital increase in Spanish lender Santander, the quarter's biggest
ECM deal by far.
Goldman topped worldwide ECM rankings, followed by JP Morgan and UBS.
UBS led league tables in Europe, up from third at the same time last
year.
The Santander deal helped catapult all four Spanish exchanges to top
position by amount raised in the quarter. Shanghai led by number of
issues.
The United States, which led exchange rankings last quarter,
suffered from wobbles in equity and commodity markets which reduced
the number of stock market debuts. Alibaba, which last September
became the world's biggest-ever IPO, has lost around 30 percent
since hitting a high of $120 in November.
DROP IN ACTIVITY
But although bankers were busier they earned less. Global ECM fees
fell by 3 percent year-on-year to $5 billion. And with countries
such as Britain set for a drop in activity in the run-up to national
elections, ECM bankers are looking to colleagues in mergers and
acquisitions (M&A) to take up the reins.
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"The thing that is going to drive it all is whether the much talked
about but long absent M&A situations actually come through. That's
where many of us in ECM have been placing our hopes," said Adrian
Lewis, head of EMEA ECM at HSBC.
In Asia Pacific, a rally in mainland China's stock market and gains
in Hong Kong are stoking investors' demand for upcoming deals in the
region's two biggest markets, bankers say.
"The recovery we’re seeing in appetite there in markets is a very
good thing in terms of the overall regional outlook," said Jason
Cox, co-head of Asia Pacific Global Capital Markets at Bank of
America Merrill Lynch.
Financial services companies in Hong Kong and China plan more than
$30 billion worth of offerings in coming months, buoyed by a jump in
company earnings and stock trading activity in mainland China.
GF Securities Co Ltd, China's fourth-largest brokerage by total
assets, prices an up to $3.6 billion Hong Kong offering this week,
while other large offerings include the flotation of up to $3
billion by China Huarong Asset Management.
India's $3.6 billion stake sale in state-run Coal India Ltd in
January underscored optimism over privatizations in the country, as
Prime Minister Narendra Modi looks to close a budget gap.
But the biggest looming deals are in Japan, where Japan Post
Holdings Co Ltd and its banking and insurance units are planning to
list separately on the Tokyo Stock Exchange. The government has said
it plans to raise around $8 billion in the first round of sales.
(Story refiled to add dropped part of Ritter's title in fourth
paragraph)
(Editing by David Holmes)
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