While the IPO market has forged ahead strongly in the last year, it has also been a buoyant period for secondary offerings – again driven by the telecoms, media and technology sectors.
Goldman Sachs has enjoyed a better year than most in the secondary markets, leading big telecom deals in China, Japan and Germany.
Mike Evans, managing director and global co-head of equity capital markets at Goldman Sachs, says the current level of activity is set to continue, despite recent market volatility. “While it has been a volatile period, the market has been very receptive to both new capital raising and well-structured good stories for secondary offerings,” he says. “Notwithstanding that the market will still be volatile, I would expect them to continue to be busy.”
Evans says crucially there is still investor demand in the telecoms, media and technology sectors, and it is not being dimmed, despite the amount of deals in recent months. “When you think about governments selling shares in Deutsche Telekom, NTT in Japan, other governments selling telecoms in Sweden, Finland or Norway, there is a lot of paper out there and yet these deals, providing they’re properly structured, and most importantly properly marketed, are still meeting with very strong investor receptivity.”
The most significant deals for Goldman Sachs in the last year have involved China Telecom ($2 billion), NTT ($15 billion), Deutsche Telekom ($14.5 billion) and Sonera ($3.5 billion).
Evans says of these: “All of those were for people who had been to the market before.
There was a special premium on being able to structure and market the transactions properly in order to convince investors to participate again, even though they already own shares.”
Evans says that this was possible because they were all telecoms because that sector is changing so quickly. “It is seen as a very important growth sector and there are different aspect of the story you can focus on,” he says.
For example, with Deutsche Telekom’s latest offering, Evans says they focused on the fact that T-online, Deutsche’s online service had just been taken public and that T-mobil, the mobile division will be going public in the autumn. “So the management team of Deutsche Telecom was presenting investors with a very different story than we did with T-2 and when we did the IPO.”
So with a fast moving and evolving industry sector there will always be a new story to present to investors each time.
Evans says Goldman Sachs is commanding a leading position in the market by maintaining a highly integrated approach across its various offices. “People in Asia, London and the US are all in close contact, functioning as one global capital markets team,” he says.
On top of this the firm is constantly looking to hire the best people to join its team in order to keep it up to the mark. “We can leverage off the huge base of experience we have in any one market to bring the most relevant best practices to governments and corporate issuers around the world,” says Evans.
