Deal activity remains lively as this year’s Best Equity Banks lean on tech to keep capital flowing.

Author: Rob Daly, Deborah Ritchie, Joel Kranc

There is no shortage of financing and deal-making in equity capital markets moving into 2021. In fact, four out of the top five equity capital market sectors—technology, health care, finance and telecommunications—beat their 2019 numbers last year, according to Dealogic. Flows and projections going forward are strong; and in a year that witnessed change at its most disruptive, global investment banks, while feeling the pain of the Covid-19 pandemic, adapted well.

Global Finance’s 2021 Best Equity Investment Banks showcase accommodations that carried the sector through an unprecedented year and into 2021.

J.P. Morgan takes the top prize as the best investment bank for equities globally.  Vis Raghavan, JPM’s CEO for EMEA, noted in an interview in late September that the world was “awash in liquidity” despite pandemic needs, largely due to the long stretch of quantitative easing and stimulus. Going forward, he said “The key driver is going to be equitization. All those companies that have secured liquidity, they’re looking at the markets and thinking ‘should I grab equity when I can?’”

Goldman Sachs took the award as Best Equity Bank for North America. The investment bank powerhouse maintained its leading position in equities trading and underwriting throughout 2020 despite COVID-19’s impact on the global economy and ended on a solid second half.

Goldman Sachs began the year planning to cut $1.3 billion annually from operating costs for the next three years to improve its return-on-equity. The bank maintained its top position on Dealogic’s league table for initial public offering revenue earning for 2020 by generating $931 million via 84 deals that raised an aggregate of $13.87 billion. Among the IPOs that the bank underwrote, 31 were for special acquisition companies (SPACs), also known as “blank check companies,” designed to bring private companies public without resorting to a typical IPO.

The global winner in Frontier Markets, EFG Hermes, was also Africa’s standout equity player in 2020. Ali Khalpey, CEO of EFG Hermes Frontier, expects positive global macroeconomic recovery and commodity price improvement to continue to improve the environment for deals across Africa. “We continue to see strong interest from cross-border M&A [mergers and acquisitions] as well as ECM [equity capital market] activity picking up as markets continue their positive momentum,” he predicts.

According to EFG’s third-quarter report for 2020—the latest available—the investment banking division succeessfully concluded six transactions worth an aggregate value of $193 million, bringing the total number of equity, M&A and debt transactions it executed in the first three quarters of last year to 12, with a total value of $1.1 billion.

Best Equity Bank for Central & Eastern Europe goes to VTB Capital, which participated in Russia’s 2020 initial and secondary public offering boom, driven by an influx of retail and foreign private investors. VTB Capital topped Dealogic’s leaderboard for investment banks operating in the Russian equity capital markets based on transaction volume.

VTB Capital helped SovComflot, a maritime shipper specializing in the transport of petroleum and liquified natural gas, raise approximately $550 million as one of the joint global coordinators and bookrunners in early October 2020. The deal was one of the largest IPOs in the shipping sector since 2014 and the first of a Russian state company since 2013, according to Boris Kvasov, co-head of Equity Markets. The bank was also a key player for Aeroflot’s secondary offering that raised 80 billion rubles ($1.05 billion), and in Russian online retailer Ozon Holdings’ $990 million IPO.

BBVA, our global winner for Sustainable Financing, also took Best Equity Bank for Western Europe. The bank put significant effort into strengthening its corporate equities business through investments in technology and in-house capacity development, as well as partnering with European equity research and brokerage house Oddo BHF. In June, for example, the bank launched a web-based solution, called epricer, for structured equity and credit investments.

“BBVA has an ambitious growth plan for its equities franchise,” said Luisa Gómez Bravo, global head of BBVA Corporate & Investment Banking, in a company statement.

While IPO issuance was muted throughout 2020, primary share accelerated offerings and rights offerings drove volumes in EMEA-listed equity capital markets. Of these transactions, the largest was Cellnex Telecom’s 4 billion euro rights offering, in which BBVA acted as joint bookrunner. A staggering 99.45% take-up and excess demand led to the deal being more than 46 times oversubscribed. Major shareholders such as the Abu Dhabi Investment Authority and the Government of Singapore Investment Corporation committed at launch to subscribe in full for their entitlements, equivalent to 18.7% of Cellnex’s share capital. Shares in Cellnex traded above the subscription price throughout the marketing period with a 32% headroom to issue price when the rights trading period ended.

BBVA also acted as joint bookrunner in International Airlines Group’s 2.75 billion euro rights issue. Around 20% of the company’s share capital were Spanish and UK retail shareholders. Qatar Airways Group, the company’s main shareholder, committed to subscribe in full for its entitlements, equivalent to 25.1% of IAGs share capital. A strong appetite from shareholders and investors translated in a 100% acceptance of the total shares on offer.

BBVA acted as sole broker and agent bank in the 2.84 billion euro takeover bid launched by Swiss financial markets infrastructure operator, SIX Group over BME and helped to structure a sell-out mechanism. The transaction was finalized in September, once squeeze-out conditions were met.

In an extraordinary year, and despite widespread lockdowns, BBVA continued to offer clients a compelling combination of advice and execution. It is considered a leader in equity capital markets business, with Refinitiv ranking it second in its ECM League Tables as of Q3 2020.

Bradesco BBI is the champion in Latin America. Bradesco had a notable performance in the equity capital market segment in 2020. The bank acted in at least 18 transactions that, together, earned a total of $3 billion for its clients.

Among its major equity offerings was the landmark Ambipar IPO. Bradesco also conducted a follow-on round for Via Varejo—the country’s largest electronics and furniture retailer. Despite all the skepticism over retail at the start of the pandemic, the transaction achieved a volume of around $820 million. Another significant follow-on offering involved Rumo, the largest Brazilian transportation company, and brought in $1.2 billion.

Despite Alibaba’s postponement of the initial public offering (IPO) for its fintech affiliate Ant, China International Capital Corporation (CICC), which was slated as one of the main underwriters on the deal, pushed itself to the top of the Best Equity Bank ranking for the Asia-Pacific region. China accounted for 24% of total volume transacted in calendar 2020 in the region, according to a recent statement by Michael Tse, Dealogic’s head of research, Asia Pacific, bolstering CICC’s position.

CICC listed its shares on the Shanghai Stock Exchange last year and is hoping to benefit from a government push to accelerate capital market reforms. Notable deals last year included assisting with the $258 million offering for Sino-Ocean Service and smart electric car maker NIO’s $2.65 billion follow-on offering.

First Abu Dhabi Bank takes the award for Best Equity Bank in the Middle East for the fourth year in a row. It has not been unaffected by Covid and the economic fallout from the pandemic, however. The United Arab Emirates’ (UAE’s) biggest lender posted a 16% drop in 2020 net profit on higher impairment charges as the twin health and economic crises hit the UAE.

First Abu Dhabi nevertheless claimed a 14% market share on $638 million in proceeds from two deals, according to Refinitiv’s Middle East and North Africa (MENA) ECM league table for 2020. The bank was joint bookrunner on the Abu Dhabi National Oil Company’s $1 billion institutional placement, the second-largest ECM issuance for the MENA region in 2020.

Moving forward, First Abu Dhabi says it is looking to further strengthen its ECM division through increased presence and new hires in Saudi Arabia, the region’s biggest market for IPOs.