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Back in business

IPO fever is yet to sweep the equity capital markets, but there has been a marked upturn in other types of issuance, putting pressure on banks' depeleted ECM division. Some are rehiring, but can the revival be sustained?

HERE'S A QUIZ question. The following equity capital markets deals were all done in the same month of the same year: the first convertible for a dot com in Europe; the largest ever sole-managed block trade; an accelerated book build for a technology company equivalent to 50 days' trading volume priced at a premium to the close. When was this? The answer, which may come as a surprise to many, is last month. Lastminute.com's e103 million convertible, Dutch telecom KPN's e2 billion block trade, and the French state's sale of 16% of software company Dassault Systèmes for e600 million, were all successfully executed in September.

Global equity capital markets volume in the first nine months of 2003 was down 5% on the same period in 2002, making for the worst first three quarters since 1997 according to Dealogic. But there were strong levels of issuance in the second and third quarters. This suggests that the primary equity market is back in business.

It's only following the trend in the secondary market. Fears about the war in Iraq and mixed economic data kept issuance low in the first quarter but the strong rally in the stock markets since March has given issuers the courage to raise equity again.

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