* Stock market fundraising crosses $1 trn for 2020
* ECM fee pot hits record high of $28.7 bln
* Tech IPO bonanza set to continue in 2021
By Abhinav Ramnarayan, Clara Denina and Elizabeth Howcroft
Dec 31 (Reuters) - Emergency corporate fundraising and a
clamour for tech stock market listings pushed equity capital
market volumes to over $1 trillion in 2020 and fees for
investment bankers in the sector to a record high, data showed.
As the COVID-19 pandemic raged across the world, companies
turned to their shareholders in droves to get the funding needed
to get through a bruising global recession.
Combined with demand for new growth-oriented companies --
particularly tech -- in an era of record low interest rates,
that was responsible for a record-shattering year in stock
market fundraising, bankers and analysts said.
Global equity capital markets (ECM) activity rocketed by 55%
to a record $1.1 trillion in 2020, data from Refinitiv showed.
For an interactive version of this chart, click here: https://tmsnrt.rs/2KMWs5I
The year was characterised by companies spanning from
airlines to retail and hospitality scrambling for funds to
weather the pandemic or to repay emergency government loans.
Airlines operators such as Lufthansa and British
Airways owner IAG led the way, tapping markets for
billions of dollars to navigate a severe crunch in the sector.
But as the year progressed and as unprecedented central bank
action supercharged markets, a slew of initial public offerings
hit the market, pushing IPO volumes in the United States to a
13-year high of $80.23 billion, the Refinitiv data showed.
These were characterised by unprecedented first-day pops,
with the likes of Airbnb and Warren Buffet-backed
Snowflake doubling in value on their market debuts
,.
"In a world of incredibly low interest rates, any company
able to demonstrate growth in future cash flows is going to be
rated highly. Sectors such as healthcare, fintech and tech are a
huge part of this," said James Fleming, Citi’s global co-head of
equity capital markets.
Fleming expects the trend of tech IPOs to continue into the
first half of 2021, while equity raises for balance-sheet
purposes are also likely to continue into the new year with many
sectors yet to fully recover from the COVID-19 crisis.
While the United States has been at the forefront of the IPO
boom, the trend is likely to spread to Europe in 2021.
Overall, bankers made $28.7 billion from ECM fees, the
biggest yearly pot ever. IPO fees also hit a 13-year high of $10
billion, the data show.
Those figures rise to $32.5 billion and $13.8 billion
respectively when including the listing of so-called special
purpose acquisition companies (SPACs), though the fees on such
deals are only payable in full if the vehicle ends up acquiring
a company.
Issuance in 2021 could be supported by a continued surge in
mergers and acquisition activity.
"In Europe, we will see much more M&A-related equity
financing in 2021 across a broad range of sectors, as opposed
to just balance sheet repair situations," said James Palmer,
head of EMEA ECM at Bank of America.
The cancellation of Ant Group's planned $37 billion listing
-- in what would have been the largest IPO in history -- was the
one fly in the ointment. It raised the threat of regulatory
hurdles for tech firms, particularly those with operations in
China.
But with more positive news around vaccine rollouts emerging
across the world, investors are also expecting to see the flow
of IPOs continue unabated.
Companies that were satisfied with private funding rounds in
the past are now coming to the public market to take advantage
of buoyant stock market valuations.
"There is a pendulum shift that's ongoing," said Emiel van
den Heiligenberg, head of asset allocation at Legal & General
Investment Management. "As long as valuations stay high, there
is an incentive for private equity to go to market."
(Editing by Larry King)
International Airlines (IAG)
