After a year marked by strong demand for selected bonds, investor fashion looks set to switch back to equities next year on the back of more positive macro-economic prospects.
Some investment bankers will welcome the change.
Companies and their advisers have had to take advantage of short windows of opportunity to get share sales done in the past year, as markets were buffeted by the eurozone debt crisis, lacklustre global growth, the US presidential election and lately worries over the ‘fiscal cliff ’.
Follow-on share sales helped offset a 28 per cent drop in new listings, with global equity capital markets volumes totalling $625 billion so far this year, Thomson Reuters data showed, a one per cent rise on 2011.
“In the last year there has been a real aversion to risk. I think you are going to see that revert to a more constructive ... demand for risk,” said Joe Reece, global head of equity capital markets at Credit Suisse. “We are going to see an increase in demand from investors for equity which will significantly benefit issuers and enable the calendar (of deals) to be expanded,” Reece said.
Some investors have already begun increasing their exposure to shares as hopes rise that greater economic stability will return in 2013.
Follow-on activity, which includes accelerated block sales of existing shares, was up 15 per cent on 2011, accounting for 71 per cent of equity capital markets volumes this year.
“In the uncertain world that we live in, if you can do an accelerated deal, you do,” said Oliver Holbourn, head of UK, Ireland and South Africa equity capital markets at Bank of America Merrill Lynch.
The financial sector dominated activity in 2012, making up around 30 per cent of volumes, boosted by the US government’s five sell-downs of bailed-out insurer American International Group – which generated total proceeds of $45.8 billion. Other large deals included AIG exiting Asian insurer AIA Group and Italian bank UniCredit’s capital hike.
Goldman Sachs retained its position at the top of the global ECM investment banking league table, the Thomson Reuters data showed, after being involved in many of the year’s biggest offerings including the $16 billion float of Facebook.
Bolstered by the Facebook offering, the US saw its strongest year for IPOs since 2007, although the bulk of activity was made up of smaller, high-growth deals clustered around the technology and retail sectors.