ECM bankers thrive on M&A boom
The M&A boom is good news for equity capital markets. M&A, as well as generating more transactions, tends to be more profitable than other types of ECM deals. Banks with strong M&A businesses stand to benefit most. Peter Koh reports.
THE REVIVAL IN mergers and acquisitions activity is reinjecting vigour into equity capital markets. M&A-related transactions in the third quarter accounted for as much as 27% of ECM volume, compared with just 6.7% over the same period last year. Acquisition-related deals added $13.7 billion to ECM volumes in Europe in the third quarter, and ECM bankers expect more to come.
Some of the biggest deals this year have been M&A related, such as France Telecom’s €3 billion rights issue in September and ABN Amro’s $3.3 billion rights issue in March.
Reasons to be cheerful ECM bankers have good reason to be optimistic that there’s more to come. There are solid long-term drivers behind much of the M&A boom. “A big part of the current M&A wave in Europe is the adjustment of the European corporate landscape to clear changes in the European regulatory environment,” says Paulo Pereira, head of M&A in Europe at Morgan Stanley. “This is particularly true in some sectors where the liberalization and privatization waves of the 1990s created markets out of what were previously protected monopolies and government departments. Fundamental changes in these markets have yet to filter through.