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Capital Markets

Investment banking: No clouds on tech banking horizon

Facebook’s pending multi-billion dollar IPO is raising the spectre of a new tech bubble. Bankers argue that today’s tech and social media boom is different to that of the late 1990s. But the competition for mandates is more pressing than ever.

A battleground is forming on Wall Street. Much ink has been spilled over Morgan Stanley and Goldman Sachs’s competition to be coveted left lead on the Facebook IPO, and the pressure on Wall Street firms to be the investment bank of choice in the tech sector is plain to see.

The banks’ PR people are on lockdown. Even finding bankers to talk about general trends in the tech sector is a difficult task. As one bank PR says: "We cannot risk even being seen to talk vaguely about tech. Not in M&A and not in ECM. It’s just too hot a topic right now and one wrong comment could cost us too much money."

Chris Colpitts, head of technology coverage at Deutsche Bank in New York, confirms this view. "It’s a highly competitive sector where you have to do everything right," he says.

According to Dealogic, volumes of $8.9 billion in tech/internet-related IPOs were undertaken in the US last year. That’s small compared with the $34.2 billion in volumes in 2001 just before the bubble burst, but it’s the third-highest year for volumes since that period. With Facebook’s IPO, which could raise as much as $10 billion, expected to launch in the second quarter, 2012 looks set to reach a new height for volumes since 2001.

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