LONDON The technology, media and telecoms (TMT) sector has seen the busiest start to a year in terms of M&A deals since the height of the dot.com boom in 2000, giving a boost to boutique banks which are increasingly winning work as advisers.
The $64.8 billion of mergers and acquisitions (M&A) in the TMT sector account for almost a third of all deals announced so far this year, according to Thomson Reuters data.
This week alone, U.S. cable firm Liberty Global (LBTYA.O) unveiled a $23-billion bid, including debt, for Britain's Virgin Media VMED.O, while Dell's DELL.O founder and CEO struck a $24.4-billion deal to take the PC-maker private.
But the surge in TMT dealmaking has not been enough to lift business for M&A bankers overall. The total value of deals announced so far this year is $202.6 billion, down 3 percent on the same time a year ago.
M&A activity has remained sluggish in the aftermath of the global financial crisis. The value of M&A deals globally rose just 2 percent in 2012 to $2.6 trillion, according to Thomson Reuters/Freeman Consulting data.
And a reduction in the number of large deals translated into a 13 percent drop in fees to $24.7 billion - bad news for investment banks facing higher costs from tougher regulation.
A busy start to the year for new listings, however, could raise bankers' hopes for 2013, with global volumes tripling year-on-year to $10.6 billion, the Thomson Reuters data show.
THE RISE OF THE BOUTIQUE
In the TMT sector, a combination of large cash piles, low interest rates, some players looking to divest assets to cut debt and others seeking to bulk up to tackle tough regulations and stiff competition, has fuelled dealmaking.
This week's two big deals have netted investment bank advisers as much as $200 million in advisory fees and $600 million in debt underwriting fees, Freeman consulting estimates.
While Credit Suisse CSGN.VX narrowly leads the ranking of advisers in the TMT sector, having won mandates to advise both Liberty Global and Silver Lake Partners in the latter's joint bid for Dell, the surprise winner in the league tables has been a boutique bank founded just last year.
For its role as lead financial adviser to Liberty Global in its bid for Virgin Media, LionTree Advisors LLC has been propelled into seventh place globally for all announced M&A transactions year-to-date, the data shows.
Based in New York, LionTree was set up in July 2012 by former head of investment banking for the Americas at UBS UBSN.VX, Aryeh Bourkoff, and former co-head of U.S. M&A at UBS, Ehren Stenzler.
Liontree also acted as financial adviser to Warner Music in its $764-million purchase of EMI's Parlophone Label Group.
Rival boutique Evercore Partners, meanwhile, advised the Dell board of directors alongside J.P. Morgan (JPM.N), lifting it to fifth position in the global rankings from 39th last year.
For several years, boutique banks have been gaining market share from bigger rivals, claiming they have fewer conflicts of interest when they advise clients because they are not trying to sell other services, such as debt underwriting.
During 2012, boutique and independent investment firms accounted for 21 percent of global M&A advisory fees, compared with 10 percent in 2002, Thomson Reuters data shows.
GOLDMAN SACHS STILL ON TOP
Overall, Goldman Sachs (GS.N) is retaining its position at the top of the league table, advising on 26 deals worth $64.5 billion year-to-date with a 32.9-percent market share.
J.P. Morgan ranks second, advising on 19 deals worth $52.7 billion with a 26.9-percent market share. Credit Suisse comes in third, advising on 21 deals worth $46.9 billion and a 23.9-percent market share.
Goldman Sachs also tops the global league table for equity capital markets activity, acting as bookrunner for 35 deals worth $8.5 billion with 12.6-percent market share.
That included German real estate group LEG Immobilien's (LEGn.DE) $1.6-billion Frankfurt flotation, one of three billion-plus initial public offerings (IPOs) so far this year.
A $1.1-billion listing by Japan's Nippon Prologis Reit (3283.T) and U.S.-based Zoetis's (ZTS.N) $2.6-billion flotation have also helped to boost IPO activity.
Morgan Stanley (MS.N) ranks second in the equity league table with Citi (C.N) coming in third.
(Reporting by Anjuli Davies, additional reporting by Kylie Maclellan; Editing by Mark Potter)