The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.

Banks put their heads on the block

Block trades help to make ECM bankers look busy in quiet times. But their success rests on a knife edge. • Peter Koh reports

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 deals.

Take out a complimentary trial

Take out a 7 day trial to gain unlimited access to Euromoney.com and Asiamoney.com analysis and receive expertly-curated updates direct to your inbox.

 

Already a user?

Login now

 

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree