(Reuters) – Corporate emergency fundraising and a call for technology quotes boosted equity market volumes by more than $ 1 trillion in 2020 and commissions for investment bankers sector to an all-time high, according to the data shown.
As the COVID-19 pandemic swept the world, companies turned to their shareholders for the funding they needed to go through a major global recession.
Combined with the demand for new growth-oriented companies, especially technology, in an era of record low interest rates, which was responsible for a record year in fundraising, bankers and analysts said.
Refinitiv data showed that the activity of equity capital markets (ECM) grew by 55% to reach a record $ 1.1 trillion in 2020. (Chart: ECM global volumes reach $ 1 trillion for the first time -)
For an interactive version of this chart, click here: tmsnrt.rs/2KMWs5I
The year was characterized by airlines ranging from airlines to retail and hospitality seeking funds to overcome the pandemic or to pay for government emergency loans.
Airline operators such as Lufthansa and British Airways owner IAG led the way, taking advantage of billions of dollars in markets to navigate a severe crisis in the sector.
But as the year progressed and as the markets overloaded with unprecedented central bank stock, a large number of initial public offerings came to market, which pushed stock market volumes in the United States to a maximum of $ 13.23 billion at age 13, Refinitiv data showed.
These were characterized by unprecedented first-day appearances, such as Airbnb and Warren Buffet-backed Snowflake that doubled in value in their market debuts.
“In an incredibly low world of interest rates, any company capable of demonstrating growth in future cash flows will be well valued. Sectors such as healthcare, fintech technology and technology are an important part of it,” said James Fleming, Citi’s global co-chair of capital markets.
Fleming expects the technology stock market trend to continue during the first half of 2021, while equity gains for balance sheet purposes will also continue in the new year, as many sectors have not yet fully recovered from the crisis. of COVID-19.
While the United States has been at the forefront of the IPO boom, the trend is likely to spread to Europe in 2021.
For graphs of global ECM commissions:
Overall, bankers earned $ 28.7 billion from ECM commissions, the largest annual pot in history. Stock market rates also reached a maximum of $ 13 billion at 13, according to the data.
These figures amount to $ 32.5 billion and $ 13.8 billion respectively when the list of so-called special purpose acquisition companies (SPACs) is included, although the commissions on these offers are only paid in full if the vehicle he ends up acquiring a company.
The issuance in 2021 could be supported by a continued increase in mergers and acquisitions activity.
“In Europe, we will see much more equity financing related to mergers and acquisitions in 2021 across a wide range of sectors, rather than balance sheet repair situations,” said James Palmer, head of EMEA ECM at Bank of America .
The cancellation of Ant Group’s planned $ 37 billion list, which would have been the largest IPO in history, was what blew the ointment away. He raised the threat of regulatory hurdles for technology companies, particularly those operating in China.
But with more positive news about the launch of vaccines appearing around the world, investors also expect the OPI flow to continue non-stop.
Companies that in the past were satisfied with rounds of private financing are now coming to the public market to take advantage of current stock market valuations.
“There is a pendulum change underway,” 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 capital to hit the market.”