Asia-Pac sees higher investment banking fee

Asia Pacific, e xcluding Japan, investment banking fees reached an estimated US$11.6 billion during the first half of 2020, a 4.2% increase from the comparative period last year and the highest first half period since records began in 2000. According to a report by Refinitiv, a global provider of financial market data, equity capital markets (ECM) fees totaled US$3 billion and this was the biggest increase with 35.7% from a year ago, the highest first half period since 2015. Debt capital markets (DCM) underwriting fees amounted to US$6.2 billion, a 6.8% increase and surpassed the record period last year. Fees generated from completed M&A transactions fell to a 6-year low and totaled US$1.2 billion, down 22.8% from the same period last year. Syndicated loan fees declined 23.8% from a year ago and reached US$1.2 billion. DCM fees accounted for 53% of the overall Asia Pacific investment banking fee pool, followed by ECM underwriting fees with 26%, and syndicated lending fees with 11%. Completed M&A advisory fees represented 10% of the region’s investment banking fees. Bank of China took the top position for overall investment banking fees in Asia Pacific, excluding Japan, in the first half of 2020, capturing 5.1% of the wallet share.

MERGERS AND ACQUISITIONS

The value of announced M&A deals involving Asia Pacific companies, excluding Japan, stood at US$352.3 billion during the first half of 2020, down 14.5% from a year ago, making it the lowest first half period since 2013, the report said. The number of announced deals fell to a 6-year low and declined 14.9% from the first half of last year. Majority of the deal making activity involving AsiaPacific targeted the real estate sector which accounted for 15.3% market share worth US$53.8 billion, down 33.3% from a year ago. Financials and Industrials followed behind and captured 15.1% and 13.9% market share, respectively. Charoen Pokphand (CP) group’s pending acquisition of Tesco’s operations in Thailand for US$9.9 billion is currently the largest deal in Asia Pacific, and the biggestever Thailand-involvement M&A deal on record. In addition, CP Group also agreed to acquire the entire share capital of Tesco Stores (Malaysia) Ltd for US$700 million.

EQUITY CAPITAL MARKETS

Asia-Pacific, excluding Japan, saw equity and equity-related issuance a 5-year high and raised a total of US$135.0 billion worth of proceeds during the first half of 2020, a 26.1% increase from a year ago. Number of issuances also grew 15.2% compared to the first half of last year.

Initial public offerings (IPO) amounted to US$30.1 billion in proceeds, up 31.1% from the first half of last year. This was driven by Chinese IPOs which accounted for 77.0% of the region’s IPO proceeds, and 40.4% of the IPO proceeds worldwide. Beijing-Shanghai High Speed Railway raised US$4.4 billion via IPO in January, making it the biggest IPO globally for the first half of 2020. Follow-on offerings witnessed a five-year high as proceeds grew 67.8% compared to a year ago, raising US$83.7 billion during the first half of this year. Reliance Industries’ priced its US$7 billion rights offering in June - the biggest ECM offering in Asia Pacific for the first half of 2020. The deal is also currently India’s largest-ever ECM offering, surpassing the previous record from ICICI Bank’s US$4.6 billion follow-on offering in June 2007. Asia-Pacific convertible bonds raised US$21.2 billion and fell 38.0% in proceeds after witnessing a record first half period in 2019. Asia Pacific Healthcare saw the highest equity capital raising so far this year with US$18.1 billion, more than double the proceeds raised from a year ago and captured 13.4% of the market share. Financials and Industrial followed behind with 13.3% and 11.7% market share, respectively.

DEBT CAPITAL MARKETS

Primary bond offerings from Asia-Pacificdomiciled issuers hit an all-time high and raised US$1.5 trillion during the first half of 2020, a 12.3% increase from a year ago, making it the strongest semi-annual period on record. China accounted for 75.0% of the region’s bond proceeds worth US$1.1 trillion, up 13.3% from the first half of 2019. South Korea and Australia bond issuance accounted for 6.6% and 5.1% market share, respectively. Asia Pacific investment grade bonds reached US$830.5 billion, up 17.7% after surpassing the record set during the first half of 2019. Bond offerings from Government & Agencies captured 39.6% market share, and raised a record amount of proceeds worth US$578.0 billion, an 11.4% increased from a year ago as number of issuances saw one of the busiest periods and grew 28.5% year-on-year. The Australian Office of Financial Management issued a record US$12.2 billion bond offering in May. The Financials sector accounted for 34.0% of the region’s bond proceeds and totaled US$496.3 billion, up 8.9% from the same period last year. This was driven by two jumbo issuances: Agricultural Bank of China’s onshore perpetual bond issuance worth US$12.0 billion and Postal Savings Bank’s US$11.4 billion perpetual bond.