LONDON New share listings in the United States has their worst year since 2009, Thomson Reuters data showed on Tuesday, as a number of deals were pulled or priced below their initial range.
Global listings were down 26 percent compared with 2014, at $185.9 billion. The worst hit market was the United States, which has booked $28.7 billion in initial public offerings activity so far this year, down 48 percent on 2014.
Asia also suffered, with listings down 36 percent at $65 billion, but Europe was up 2 percent at $69.1 billion.
"We all thought that we might finally get a year where we would be able to put four quarters together," said UBS UBSG.VX global head of equity capital markets (ECM) Sam Kendall.
"If you looked at the pipeline and how people were thinking about the world, it just felt good and then the wheels came off."
The strong run of deals at the beginning of the year was blown off course during the summer, as concerns over a slowdown in China and uncertainty around a looming U.S. rate rise increased volatility to levels not seen since 2011, at the height of the European debt crisis..
Also, the China Securities Regulatory Commission (CSRC) abruptly suspended listings approvals in mid-June.
In the United States, listings including grocery chain Albertsons (ABS.N), luxury retailer Neiman Marcus [NMRCUS.UL], and telecoms firm Digicel DCEL.N were delayed or pulled.
Other deals, such as the payments systems company First Data (FDC.N), which was expected to be the biggest IPO of the year, had to have its price range revised to get it over the line.
"We expected a big IPO class emanating from 2007 and 2008 private equity investments, some of which represented the last investments in people's funds, and they ended up not pricing in the second half," said Credit Suisse's CSGN.VX global head of ECM, David Hermer.
OTHER SHARE SALES
The hit taken by the IPO market was made up for by other equity issues and sales, as global equity capital markets activity reached $856.3 billion, just 4 percent down from last year.
Follow-on activity, made up of rights issues and block sales, was up 8 percent over the year, reaching an all-time high since records began in 1980 of $581.4 billion.
This activity was particularly driven by the financial services sector, where capital hikes including those for Santander (SAN.MC), Credit Suisse and Standard Chartered (STAN.L) in Europe, but also Haitong Securities (0665.HK) and Huatai Securities (601688.SS) in Asia, were among the top 10 deals for the year.
Block sales are becoming an increasing part of banks' busainess in the equities markets. In Europe block transactions made up 60 percent of total follow-on deals, with $98.847 billion in proceeds.
Consequently, banks are having to devote more resources to originating and executing this kind of work.
"Mandates for accelerated placements will continue to be carnivorously competitive, as an active role is critical for building a strong ECM franchise," said Craig Coben, co-head of global ECM at Bank of America Merrill Lynch.
While ECM activity was almost in line with last year, fees were 13 percent down, totaling $20.2 billion, as follow-on deals don't pay as well as IPOs.
"You had the fee pool down massively this year, part driven by a lower IPO market. We should see issuance and fees increase next year," said Kendall.
The ECM regions that lost out in 2015, notably the United States and China, could take leading positions next year, as several prospective issuers that postponed their offers finally come to market.
"There is a tremendous backlog of IPOs so we expect a big year in the U.S. market," said Hermer. "The Americas is the biggest region of pent-up supply."
The Chinese government's decision to implement a U.S.-style registration system for IPOs has led KPMG China to expect a boom year in 2016.
"In light of all the IPO market reform initiatives, we are quite positive for 2016 for both China and Hong Kong," said Louis Lau, a partner at KPMG China's capital markets advisory group.
But despite the strong pipeline expected by many investment banks, they remain cautious.
"2016 could be predictably unpredictable, similar to what happened this year," said Mark Hantho, global head of ECM at Deutsche Bank (DBKGn.DE).
"There will be moments of global confidence at times, but I don't foresee it being an in-sync world."
(Reporting by Emiliano Mellino and Elzio Barreto, Editing by David Evans, Greg Mahlich)