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Emergency cash calls, tech IPO frenzy push 2020 banker fees to record high


(#Reuters) – #Emergency corporate fundraising and a clamour for tech stock market listings pushed equity capital market volumes to over $1 trillion in 2020 and fees for investment bankers in the sector to a record high, data showed.

FILE PHOTO: A man uses his phone on #Wall #St. outside the #New #York #Stock #Exchange (NYSE) in #New #York #City, #New #York, U.S., #November 9, 2020. REUTERS/Brendan #McDermid

#As the COVID-19 pandemic raged across the world, companies turned to their shareholders in droves to get the funding needed to get through a bruising global recession.

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#Combined with demand for new growth-oriented companies — particularly tech — in an era of record low interest rates, that was responsible for a record-shattering year in stock market fundraising, bankers and analysts said.

#Global equity capital markets (ECM) activity rocketed by 55% to a record $1.1 trillion in 2020, data from #Refinitiv showed. (#Graphic: #Global ECM volumes hit $1 trillion for the first time – )

#For an interactive version of this chart, click here: tmsnrt.rs/2KMWs5I

The year was characterised by companies spanning from airlines to retail and hospitality scrambling for funds to weather the pandemic or to repay emergency government loans.

#Airlines operators such as #Lufthansa and #British #Airways owner IAG led the way, tapping markets for billions of dollars to navigate a severe crunch in the sector.

#But as the year progressed and as unprecedented central bank action supercharged markets, a slew of initial public offerings hit the market, pushing IPO volumes in the #United #States to a 13-year high of $80.23 billion, the #Refinitiv data showed.

These were characterised by unprecedented first-day pops, with the likes of #Airbnb and #Warren #Buffet-backed #Snowflake doubling in value on their market debuts,.

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“In a world of incredibly low interest rates, any company able to demonstrate growth in future cash flows is going to be rated highly. #Sectors such as healthcare, fintech and tech are a huge part of this,” said #James #Fleming, #Citi’s global co-head of equity capital markets.

#Fleming expects the trend of tech IPOs to continue into the first half of 2021, while equity raises for balance-sheet purposes are also likely to continue into the new year with many sectors yet to fully recover from the COVID-19 crisis.

#While the #United #States has been at the forefront of the IPO boom, the trend is likely to spread to #Europe in 2021.

#For graphic of #Global ECM fees:

#Overall, bankers made $28.7 billion from ECM fees, the biggest yearly pot ever. IPO fees also hit a 13-year high of $10 billion, the data show.

#Those figures rise to $32.5 billion and $13.8 billion respectively when including the listing of so-called special purpose acquisition companies (SPACs), though the fees on such deals are only payable in full if the vehicle ends up acquiring a company.

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#Issuance in 2021 could be supported by a continued surge in mergers and acquisition activity.

“In #Europe, we will see much more M&A-related equity financing in 2021 across a broad range of sectors, as opposed to just balance sheet repair situations,” said #James #Palmer, head of EMEA ECM at #Bank of #America.

The cancellation of #Ant #Group’s planned $37 billion listing — in what would have been the largest IPO in history — was the one fly in the ointment. #It raised the threat of regulatory hurdles for tech firms, particularly those with operations in #China.

#But with more positive news around vaccine rollouts emerging across the world, investors are also expecting to see the flow of IPOs continue unabated.

#Companies that were satisfied with private funding rounds in the past are now coming to the public market to take advantage of buoyant stock market valuations.

“There is a pendulum shift that’s ongoing,” said #Emiel van den #Heiligenberg, head of asset allocation at #Legal & #General #Investment #Management. “As long as valuations stay high, there is an incentive for private equity to go to market.”



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https://www.reuters.com/article/global-ecm-wrap/emergency-cash-calls-tech-ipo-frenzy-push-2020-banker-fees-to-record-high-idUSL8N2J9239

##Emergency #cash #calls #tech #IPO #frenzy #push #banker #fees #record #high

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