* Global equity fundraising up 1 pct in 2012 at $625 bln
* Volume of new listings drops 28 percent
* Goldman Sachs tops equity capital market league tables
* Uncertain markets drive increase in accelerated deals
By Elzio Barreto and Kylie MacLellan and Olivia Oran
HONG KONG/LONDON/NEW YORK, Dec 21 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 advisors 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 euro zone debt crisis,
lacklustre global growth, the U.S. presidential election and
lately worries over the "fiscal cliff".
Follow-on share sales helped offset a 28 percent drop in new
listings, with global equity capital markets (ECM) volumes
totalling $625 billion so far this year, Thomson Reuters data
showed on Friday, a 1 percent 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 ECM at
"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 percent on 2011, accounting for 71
percent of ECM 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 ECM at Bank of America Merrill Lynch
The financial sector dominated activity in 2012, making up
around 30 percent of volumes, boosted by the U.S. 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
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 U.S. 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.
U.S. bankers anticipate a quiet start to 2013, but said a
few successful deals could pave the way for a slew of offerings
from large private equity backed-companies that filed with the
regulator this year, including Bright Horizons Family Solutions
Inc and satellite services company Intelsat Global Holdings SA.
Other high profile IPOs coming up include beauty products
maker Coty US Inc and Pfizer Inc's animal health unit.
Interest from foreign firms with a connection to the U.S. in
going public there is likely to continue, as they look to take
advantage of more resilient markets, said Matt Sperling,
Rothschild's head of equity advisory for North America.
This year several European companies, including vacuum
technology firm Edwards, listed in the United States.
The Jobs Act, which made it easier for smaller companies to
raise capital, could provide a further incentive, advisors said.
But Europe's IPO market, which saw a 61 percent slump in
volumes in 2012, has begun to rebound since September as
rallying stocks persuaded sellers and buyers to test the water.
While the recovery remains fragile, the lack of activity has
left a backlog of deals which could come to market next year,
Successful stock market debuts in Europe tended to be of
firms offering a strong dividend yield, such as Telefonica
Deutschland and British insurer Direct Line.
"If investors can get a clear sense there is strength in a
company's ability to pay dividends and generate an attractive
total shareholder return, there is a real audience," Darrell
Uden, UBS co-head of EMEA ECM, said, adding while this was set
to stay, investors were also keen on a return of growth stories.
Asia Pacific saw a drop in new listings, with volumes
falling 51 percent to $39.6 billion after investors burned by
underperforming IPOs last year steered clear of the market.
Southeast Asian markets including Malaysia, Thailand and the
Philippines drove IPO activity in the region, but Hong Kong and
mainland China are expected to see a rebound in 2013.
"There just has to be a more reasonable approach to pricing
deals," said Jonathan Penkin, head of ECM for Asia ex-Japan at
Goldman Sachs in Hong Kong, where for years IPOs of Chinese
state-owned firms were the main fee earner for global banks.
Conglomerate CITIC Group, Postal Bank of China and China
Minmetals Corporation Group are among the remaining large
state-owned enterprises still expected to list, bankers said.
Sectors likely to see increased activity in 2013 include
those related to Chinese domestic consumption, business-to-
consumer Internet companies and electronic gaming, said Ringo
Choi, Asia Pacific IPO leader at Ernst & Young in Hong Kong.
Analysts and bankers saw Chinese e-commerce company Alibaba
Group as a potential 2013 blockbuster IPO. Financial services
firms could also feature after several, including Bank of
Shanghai, delayed sales due to difficult markets in 2012.
Yet carefully navigating choppy markets will remain key.
"Our advice to issuers is to be ready, be nimble, and access
windows of opportunities when they arrive," said Phil Drury,
co-head of ECM for the Americas at Citigroup.