Not so long ago, equity capital markets bankers were the stars of the show in Asia. But in recent months they have taken a back seat to their counterparts in DCM and M&A where deal flow has been robust while initial public offerings, at least ones that perform well, have been a rarity.
Block trades have given ECM bankers some work to do but a big IPO will almost always beat a bunch of blocks from a business perspective.
The mood in Asia remains finely balanced and first-day trading pops, which have become the Holy Grail for many companies seeking a listing, are likely to be hard to come by. The markets remain beholden to macroeconomic developments. The eurozone crisis is by far the leading concern. A slowdown in Chinese growth is the other factor keeping the Asian equity markets in a state finely balanced between cautious optimism and familiar fear.
The fact that any IPO of decent size has a list of bookrunners that reads increasingly like a list of every bank active in ECM isnt helping matters.
Many banks are placed on deals purely for relationship reasons and play no active role in raising capital. This causes friction with other members of the syndicate that play a more active role. The situation is exacerbated because so-called passive bookrunners claim league-table credit for deals they essentially did no work on.
The size of some syndicates is getting silly. Chinas state-owned insurer, PICC Group, has mandated a record 17 banks to arrange the Hong Kong tranche of its proposed $6 billion dual listing in Hong Kong and Shanghai. At the very least this presents a logistical nightmare and at worst could be detrimental to the efficiency with which a company is brought to market.