Private equity IPOs help push up investment banking fees
The surge in new stock market listings has helped to propel investment banking fees to pre-crisis levels, cushioning sluggish fee growth from relatively subdued M&A activity.
Global investment banking fees for the first half of 2014 rose 12 per cent compared to 2013 to reach $47.1bn (£27.5bn), the biggest six-month haul since 2007, according to Thomson Reuters.
Most of the increase was driven by private equity firms floating shares on stock markets. Fees handed to investment banks by private firms rose 45 per cent compared to last year, worth $5.8bn.
An increase in initial public share offerings also helped push up fees 36 per cent, reflecting the boom in private equity-backed stock market floats.
Private equity firms such as KKR and Dubilier Clayton & Rice have appointed banks to list shares, bumping up bankers’ fees.
However, M&A banking fees – long a staple of investment banking fee generation – rose more slowly than IPO fees, up six per cent in the second quarter compared to 2013.
Separate figures from Deloitte yesterday showed the environment would stay subdued. The firm’s mergers and acquisitions index predicts 8,350 deals in the third-quarter of this year – up just nine per cent on the same time last year.
“Several high-profile withdrawn deals have skewed the public perception of the current M&A market,” Deloitte’s head of M&A Iain Macmillan said.