Business & Investment

Urgent cash calls, tech IPO frenzy boosts banking fees in 2020 to record highs –

* Equity market funding will exceed $ 1 trillion in 2020

* ECM feepot reached a record $ 28.7 billion

* TechIPO Bonanza will continue in 2021

December 31 (Reuters) – Urgent corporate financing and screams for listing on the high-tech stock market will drive the volume of equity capital markets to over $ 1 trillion in 2020, with record highs for investment bankers in this sector The data showed that it reached.

As the COVID-19 pandemic rages around the world, companies have turned to large numbers of shareholders to raise the funds needed to survive the severe global recession.

According to bankers and analysts, the demand for new growth-minded companies, especially tech companies, in an era of record low interest rates has marked a record year in stock market financing.

Global equity and capital markets (ECM) activity surged 55% to a record $ 1.1 trillion in 2020, according to Refinitiv data. Click here for an interactive version of this chart.

The year was characterized by companies ranging from airlines to retailers and the hospitality industry seeking funding to survive a pandemic or repay a government emergency loan.

Airlines such as Lufthansa and British Airways owner IAG have led the way in opening up multi-billion dollar markets to survive a serious crisis in the sector.

However, as the years progressed and unprecedented central bank behavior overestimated the market, numerous initial public offerings hit the market, with US IPOs hitting a 13-year high of $ 80.23 billion. Refinitiv data shows that it was pushed up.

These feature unprecedented first-day pop, with Airbnb and Warren Buffett-backed snowflakes doubling their market debut.

“In an incredibly low interest rate world, any company that can show future cash flow growth will be appreciated. Sectors such as healthcare, fintech and technology are a big part of this. “We are,” said James Fleming, Global Co-Head of Citi’s Equity Capital Markets.

Fleming expects tech IPO trends to continue into the first half of 2021, but balance sheet equity hikes could continue into the New Year, with many sectors fully recovering from the COVID-19 crisis. I have not.

The United States has been at the forefront of the IPO boom, a trend that could spread to Europe in 2021.

Overall, bankers earned $ 28.7 billion from ECM fees. This is the largest annual pot ever. According to data, IPO fees have also reached a 13-year high of $ 10 billion.

Including the listing of the so-called Special Purpose Acquisition Company (SPAC), these numbers would rise to $ 32.5 billion and $ 13.8 billion, respectively, but the price of such a transaction would result in the vehicle acquiring the company. You will only be paid in full if.

Issuance in 2021 may be supported by a continuous surge in M ​​& A activity.

James Palmer, Head of EMEAECM at Bank of America, said: “In Europe, not only balance sheet restoration status, but also M & A-related equity finance will increase significantly in a wide range of sectors in 2021.

Ant Group’s planned cancellation of the $ 37 billion list, which appears to have been the largest IPO in history, was one of the ointment flies. It poses a threat of regulatory hurdles for high-tech companies, especially those operating in China.

But with more positive news about vaccine deployments emerging around the world, investors also expect the IPO flow to continue unabated.

Companies that were happy with private funding rounds in the past are now coming to the open market to take advantage of active equity market valuations.

“There is an ongoing pendulum shift,” said Emiel van den Heiligenberg, Head of Asset Allocation for Legal & General Investment Management. “As long as valuations remain high, there is an incentive for private-equity funds to hit the market.”

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Urgent cash calls, tech IPO frenzy boosts banking fees in 2020 to record highs – Urgent cash calls, tech IPO frenzy boosts banking fees in 2020 to record highs –

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