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Hoping for a primary market revival

A burst of primary market activity in Europe last month had equity capital markets bankers predicting a busy fourth quarter. This might be wishful thinking. Although historical data suggest that the months after a US presidential election are usually relatively buoyant, confidence surveys indicate that equity investors are still in cautious and highly selective mood.


THE BLACKBERRIES MUST have been buzzing non-stop on the beach this summer. The moment the annual August holiday season ended in Europe, investment bankers were ready to sell stock worth e10.75 billion ($13.5 billion) on the primary market in less than two weeks.

First off the block were Morgan Stanley, BNP Paribas, JPMorgan, and SG, with a e5.1 billion sale of 249.5 million shares in France Telecom for Agence France Trésor on September 3. The deal, the third-biggest accelerated bookbuild ever, was accompanied by a e1.15 billion convertible from France Telecom, led by BNP Paribas, SG, and Goldman Sachs.

Six days later, Morgan Stanley and UBS sold e2.6 billion-worth of Sanofi-Aventis shares for Kuwait Petroleum Corp.

The next day, Santander Central Hispano sold shares worth £1.3 billion ($1.6 billion) in Royal Bank of Scotland in a deal led by Merrill Lynch that sold out in just four hours.

The success of these large deals was helped by the return of US equity investors to the European market. It's a flow of funds that has gathered pace in the past few months and which capital markets teams will be watching closely.

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