After a disappointing year, investment banks are looking forward to a recovery in equity and M&A markets, and winners of our annual awards are poised to succeed.

Author: Michael Shari

REGIONAL WINNERS

At the regional level, our award for Best Investment Bank in North America goes to Goldman Sachs, which secured a strong lead in the region’s M&A league tables by advising its clients on no less than 202 mergers and acquisitions that were valued at $745.1 billion, according to Dealogic. This strong lead secured a 33.5% share of the region’s M&A market for Goldman. The Wall Street titan also ranked a close second to J.P. Morgan in North America’s equity capital markets, raising $28.9 billion in 188 deals and claiming an 11.8% market share.

Novelli, UBS: The M&A market is white-hot at the moment.

In Western Europe, the shock waves that the Brexit vote sent across the Continent wreaked havoc on investment bank activity. More challenged there than anywhere else on earth last year, Europe’s investment banks reported less revenue from investment banking than at any time in the previous 13 years, pulling in a mere $16 billion. The UK accounted for a smaller share of investment banking in Europe overall than in the previous year, falling to just 25%, according to Dealogic.

Historically among the most stable and best capital banks in the eurozone, Deutsche Bank, which won our award for Best Investment Bank in Western Europe, served as the lead bookrunner for the IPO of innogy SE, the green energy business of German electrical utility RWE. Raising $5.2 billion on the Prime Standard of the Frankfurt Stock Exchange, innogy was the third largest IPO of 2016 — and Europe’s biggest since Glencore Plc went public in 2011. This year, Deutsche Bank expects revenues from investment banking to receive a boost from an improved economic outlook, according to a statement by the bank.

Central and Eastern Europe (CEE) benefited from oil prices first rising and then stabilizing last year. Despite US sanctions against Russia in retaliation for allegedly meddling in the US presidential election last November, and international sanctions tied to Russia’s invasion of Ukraine in 2014, higher oil prices, combined with signs that economic growth was returning and inflation had decelerated, helped to propel a 17% surge in the MICEX index of Russian stocks during the last two months of 2016.

“Even after these rises, CEE equities still look undervalued relative to developed markets; and together, these factors are reigniting investor interest in the

Orcel, VTB: CEE equities still look undervalued relative to developed markets.

region,” says Riccardo Orcel, deputy CEO of VTB Group, the parent company of VTB Capital of Moscow, which wins our award for Best Investment Bank in Central and Eastern Europe. “We have also noticed that international banks are more interested in returning to the Russian market.”

In the bond market in particular, Orcel sees strong demand for high-quality issuers from the CEE. Bond prices are tightening up but still providing investors with attractive yields compared to those of bonds being issued this year in developed markets. Orcel cites a $500 million eurobond issued by Russian Railways at a yield of just 4.375%, showing strong demand, in a deal that VTB Capital led. “We have a strong pipeline of capital markets deals in the near term,” says Orcel. “The increased availability of attractive rates in the international capital markets is likely to mean that public issuance increases further this year.”

In Asia-Pacific, the only region to see solid growth in capital markets last year, banks reported a total of $16 billion investment banking revenue for 2016—breaking the previous record of $15.8 billion, set in 2010. This growth was driven by heightened capital markets activity in China, where investment banking revenue surged to an all-time high of $8.8 billion. At the top of the heap was CITIC Securities of China, which snags our award for Best Investment Bank in Asia-Pacific. All told, CITIC raked in $523 million in revenue from its investment banking services in China—more than any other bank in the world’s most populous nation—last year.

Russian Railways issued a eurobond led by VTB Capital

Our award for Best Investment Bank in Latin America goes to Itaú BBA. Building on its legacy strength in mergers and acquisitions in its native Brazil, Itaú has shattered the myth that banks based in Spanish-speaking countries enjoy a natural advantage in South American countries other than Brazil, where the national language is Portuguese. Itaú successfully spread its wings across the region’s Spanish-speaking countries. In 2016, Itaú BBA dominated mergers and acquisitions in Latin America, commanding a higher market share than any other bank. The bank led some of the highest-profile deals south of the US-Mexican border, serving as financial advisor to Statoil on its $2.5 billion acquisition of Petrobras’s stake in its Carcará field. Another strong suit for Itaú BBA is equity; it raised $664 million for its clients in seven deals for a 6.4% share of the region’s equity capital market, according to Dealogic.

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