In equity offerings, weakest quarter in more than 10 years
Global ECM volume was $155 billion, with no listings above $1 billion in the US for the first time since 2016
Global equity issuances totaled $115 billion in the second quarter, the lowest volume since the fourth quarter of 2011. In the same period last year, the volume had been $369 billion, according to Dealogic. The sum of North America and Europe is the worst since 2009, with $47.3 billion in ECM, down 30% from the already weak first quarter.
Monetary policy in major markets, war in Ukraine and increased asset volatility in general directly affect appetite for equities. The Vix index spent most of the quarter above 30 points – “no-go area” for ECM bankers.
IPO volume dropped 73% year-on-year and 33% from the first quarter. Activity was concentrated in the Middle East for initial offerings, with two of the three largest offerings, while in other countries the activity of teams at banks was limited to a few block trades. There hasn’t been a single IPO above $1 billion in China or the United States – which hasn’t happened since the first quarter of 2016.
Follow-ons accounted for US$ 71.6 billion, 62% of the total activity, driven by the Chinese Contemporary Amperex, Dubai Electricity and Water Authority’s in the United Arab Emirates, and by Eletrobras in Brazil.
While last year the Spacs helped to move the areas of shares in banks, the regulatory magnifying glass and the negative performance of part of these vehicles ended up affecting the volumes of new business – there were 15 new Spacs listed in the period in the American market, less than 15% of the activity seen a year earlier.
In Brazil, in addition to Eletrobras, five other companies managed to register a follow-on in the second quarter – Fras-le, CBA, Eneva, PetroReconcavo and CVC. Banks expect block trades and eventual follow-ons in this third quarter, with a potential reopening for IPOs at the end of the fourth quarter, with the revision of market forecasts after the presidential election. The two IPOs that were engaged in the second quarter – Corsan and BRK Ambiental, were cancelled.
Source: Value Pipeline