THIS YEAR DOZENS of bought deals have hit the equity
markets as cash-hungry vendors rush to take advantage of
short, sharp, news-driven rallies to offload non-core
holdings. Banks that bid for these blocks do so with mixed
feelings. Uncertainty, volatility and rabid competition have
made them exceptionally risky. And vendors are forcing banks
to take on more market and stock-specific risk than ever,
pushing for fully bought deals or aggressive backstop
agreements to guarantee price certainty.
A bought deal in a volatile market is not the most appetizing
business for an investment bank. But there is nothing else on the
menu to satisfy the hunger for league table position. There were
just 98 IPOs globally in the first quarter of the year, raising
only $2.6 billion, down 85% from the first quarter of 2001. Global
equity capital market volume in the first quarter was down 56% from
last year and 30% of this now comprises bought...
