Equity capital markets: Holding on to hope
A strong pipeline of deals keeps ECM bankers optimistic for 2008.
After a record 2007, in which $935.4 billion was raised through equity markets across the world, 20% more than in 2006, ECM bankers remain optimistic for 2008, despite the year’s inauspicious start.
"Clearly equity markets remain challenging as we head into 2008," says Thomas Gottstein, co-head of EMEA ECM at Credit Suisse. "Concerns about a US recession and a slowdown in countries like the UK and elsewhere mean that there is a general toning down of global growth expectations. Emerging markets in Central Europe, the Middle East, Asia and Africa, however, continue to show strong growth and we expect this to be reflected in their contribution to global ECM volumes."
In 2007 Brazil, Russia, India and China raised $255.9 billion from equity investors, almost double the amount raised in 2006, according to Dealogic. In 2008, Chinese companies alone are hoping to raise as much as $100 billion. According to Ernst & Young, Chinese companies expect to raise about $45 billion through A-share listings in Shanghai and another $33 billion through listings in Hong Kong.
M&A-related transactions could be another source of deals. "We see potential for quite a lot of volume to come from M&A transactions, where there continues to be a significant amount of dialogue," says Gottstein.