FOLLOWING THREE LEAN years, equity capital markets bankers today find it hard not to smile as they predict a massive increase in new equity issuance this year. The robust primary market recovery began in the fourth quarter of 2003. It looks set to continue. "Total issuance can only be higher than last year," says a European head of ECM. No-one doubts that. But the estimates for just how much higher vary between 15% and 50% in Europe.
The confirmed backlog for US issuers at the end of 2003 already showed 77 deals in the pipeline, expected to raise $12 billion, compared with 32 deals worth $4.4 billion at the end of 2002. In Europe the value expected from privatizations alone should top 2003's total IPO volume.
China's privatization programme, estimated to be worth $11 billion in 2004, is equivalent to nearly half the total IPO volume from Asia last year, when the region's $24.9 billion-worth of IPOs was greater than the rest of the world's combined. The numbers are certainly encouraging.
Volume won't be the only thing that changes in 2004. The business mix will alter too, with rights issues making way for a return of the IPO market.