Data compiled by Thomson Reuters as part of its quarterly equity capital markets league tables show that favorable equity market conditions helped raise the size of equity underwriting deals for the period to their highest level since Q2 2011.  The data shows that companies around the globe are steadily shunning fears of raising fresh capital by resorting to IPOs and follow-on offerings – something they became averse to since mid-2011 when the economic conditions in Europe turned for the worse. While the $187.5 billion in global equity deal volumes for the period are still shy of the $216 billion figure achieved in Q2 2011, it is a marked improvement over the dismal $98 billion in global equity deals recorded in Q4 2011.
Goldman Sachs (NYSE:GS) ousted Citigroup (NYSE:C) – which demonstrated a strong equity markets performance last year and in Q1 2012 in particular – to regain the top spot in the equity underwriting industry for the quarter. Four of the top-five banks on the list were U.S. banking giants, with the largest Swiss bank UBS (NYSE:UBS) being the only non-U.S. bank to feature on the list. The data also serves as a reference to help understand how the equity underwriting revenues generated by the world’s biggest investment banks would have changed compared to the figure for the same quarter last year.
The table below summarizes the performance of the equity underwriting unit at each of the top six banks according to Thomson Reuters’ data.
|Bank||Rank||Proceeds||Mkt. Share||# Deals||Avg. Deal Size||Q1’13 Imputed Fees||Q1’12 Imputed Fees|
|Goldman Sachs||1||$24.07 B||12.8%||89||$270 M||$351 M||$223 M|
|Citigroup||2||$14.44 B||7.7%||98||$147 M||$251 M||$176 M|
|Morgan Stanley||3||$14.36 B||7.7%||94||$153 M||$311 M||$204 M|
|UBS||4||$14.08 B||7.5%||80||$176 M||$221 M||$140 M|
|JPMorgan||5||$12.89 B||6.9%||91||$142 M||$275 M||$286 M|
|Bank of America||6||$12.25 B||6.5%||94||$130 M||$267 M||$195 M|
Goldman Sachs’ influence on the equity capital markets business becomes evident at once from the fact that the global investment bank helped underwrite deals worth one-eighth the global total value. Also, gauging from the average deal size of $270 million, which is significantly more than any of its competitors, the bank played a role in most of the largest equity underwriting deals which materialized last quarter.
In terms of number of deals, Citigroup tops the list by being a part of 98 of the 949 equity underwriting deals that went through in Q1 2013, making it the only bank to garner a share of more than 10% in terms of number of deals assisted in.
Finally, when it comes to revenue the banks collected as fees from these deals – Goldman emerges on top with imputed fees of $351 million. It must be noted here that imputed fees are merely an estimate based on historical data about fees demanded by the banks for a particular role in the equity underwriting process, and the numbers the banks actually report would differ from these figures.
But these numbers do give a good indication of what to expect. Given the fact that the imputed fees for all banks listed above besides JPMorgan (NYSE:JPM) show an increase in Q1 2013 compared to Q1 2012 (with quite a few of them gaining in excess of 50%), we can expect the banks to report considerably higher equity underwriting revenues for Q1.
Disclosure: No positions.