Global equity markets continued their growth story over the second quarter of the year with data compiled by Thomson Reuters as part of its quarterly league tables showing that the total size of equity underwriting deals for the period was the highest since Q2 2011. 
Favorable equity market conditions helped companies around the globe shun their fears of raising fresh capital by resorting to IPOs and follow-on offerings, and weak debt capital market sentiments towards the latter part of the quarter also weighed in favor of the equity capital market. Over the last six quarters, the size of the market has more than doubled from the dismal $98 billion in Q4 2011 to $200 billion for Q2 2013. The industry also witnessed a decent growth in the number of IPOs and follow-on share issues over the quarter.
Goldman Sachs (NYSE:GS) retained its hold on the top spot in the equity underwriting industry for the quarter. Incidentally, all the banks that rank among the top five in the list are U.S. banking giants. And in what comes as good news for all the banks, the data estimates a near-17% increase in equity underwriting fees for the industry as a whole – which means that the world’s biggest investment banks would have pocketed much more fee revenues compared to the figure for previous quarter.
- What Proportion Of Revenues For The 5 Largest U.S. Investment Banks Came From Trading Securities In 2016?
- How Much Did FICC Trading Contribute To The Top Line Of The 5 Largest U.S. Investment Banks In 2016?
- How Much Did Equity Trading Contribute To The Top Line Of The 5 Largest U.S. Investment Banks In 2016?
- How Have Price-To-Book Ratios For The Country’s Biggest Banks Changed In The Last 5 Years?
- How Have Securities Trading Revenues At The 5 Largest U.S. Banks Changed In The Last 5 Years?
- How Much Did The 5 Largest U.S. Investment Banks Make Through Equity Trading Activities In 2016?
The table below summarizes the performance of the equity underwriting unit at each of the top five banks according to Thomson Reuters’ data.
|Bank||Rank||Proceeds||Mkt. Share||# Deals||Avg. Deal Size||Q2’13 Imputed Fees||Q1’13 Imputed Fees|
|Goldman Sachs||1||$20.78 B||10.4%||101||$206 M||$361 M||$351 M|
|JPMorgan||2||$17.92 B||9.0%||128||$140 M||$440 M||$275 M|
|Morgan Stanley||3||$15.01 B||7.5%||102||$147 M||$355 M||$311 M|
|Citigroup||4||$14.08 B||7.1%||104||$135 M||$237 M||$251 M|
|Bank of America||5||$14.04 B||7.0%||113||$124 M||$286 M||$267 M|
Goldman Sachs’ influence on the equity capital markets business becomes evident at once from the fact that the global investment bank helped underwrite deals worth one-tenth the global total value. Also, gauging from its average deal size of $206 million which is significantly more than any of its competitors, the bank played a role in most of the largest equity underwriting deals which materialized last quarter.
In terms of number of deals, JPMorgan tops the list by being a part of 128 of the 988 equity underwriting deals that went through in Q2 2013, allowing it to garner a share of almost 13% in terms of number of deals assisted in.
JPMorgan’s role in a bulk of all equity deals for the quarter also helped it amass more fee revenues than the other banks, with imputed fees of $440 million. It must be noted here that imputed fees are merely an estimate based on historical data about fees demanded by the banks for a particular role in the equity underwriting process, and the numbers the banks actually report would differ from these figures.
But these numbers do give a good indication of what to expect. Given the fact that the imputed fees for all banks listed above (besides Citigroup) show an increase in Q2 2013 compared to Q1 2013, we can expect the banks to report considerably higher equity underwriting revenues for Q1 – in line with Thomson Reuters estimate of an increase in total revenues for the industry by 17%.Notes: