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Resurgence of M&As and IPOs to Support Investment Banks
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Global M&As were back with bang in the third quarter of 2020 as economic and business activities gradually resumed. During the quarter, dealmakers revisited transactions that were on hold as coronavirus wreaked havoc across the world.
Likewise, IPO activities rebounded, with the third quarter being one of the busiest since 2000. The green shoots of recovery were visible in last couple of weeks of the second quarter in both M&As and IPOs, with trend witnessing a significant upswing during the third quarter.
Details
Per the data provided by Refinitiv, the quarter witnessed more than $1 trillion worth of M&As deals worldwide, mainly driven by strong performance in September. The majority of the transactions were in the coronavirus-resilient sectors like technology and healthcare.
Also, the third-quarter deal activity was up almost 80% sequentially. Specifically, the United States witnessed 75% jump in deal volume, while Asia and Europe recorded spike of 67% and 21%, respectively.
M&A deals worth $5 billion or more received a major boost, with more than 35 such transactions announced during the quarter.
Talking about IPO activities, the September quarter was mainly dominated by IPOs in healthcare (almost 50%), technology and blank-check companies. Data from Renaissance Capital shows that the total amount raised through IPOs was nearly $28.5 billion from 81 listings.
Road Ahead
Sustained economic recovery and the Federal Reserve’s efforts to provide sufficient liquidity to the economy are likely to support merger activities, going forward. Despite the U.S. presidential elections looming, companies are considering means to diversify business to weather the pandemic-induced slowdown.
Also, companies are largely using stock as preferred acquisition mode, and preserving cash to tide over economic crisis. Further, private equity firms, which were largely on sidelines so far, have started deploying funds to make profitable investments.
Further, pipeline for IPOs remains strong. Stacey Cunningham, president of the New York Stock Exchange in an interview to Bloomberg TV noted that after record September, October is also shaping up for a frenzy of listings. Airbnb Inc. and DoorDash Inc. are among the big names likely to debut in the coming months.
How Investment Banks Stand to Gain?
Though the coronavirus crisis adversely impacted the economy for much of 2020, gradual revival of businesses and support from the central bank have led to significant rise in capital market activities.
Investment banks, which provide underwriting and advisory services for IPOs and secondary market offerings along with M&As, are definitely going to benefit from the rise in these activities.
Thus, big names in the industry like Goldman Sachs (GS - Free Report) and Morgan Stanley (MS - Free Report) along with those having significant exposure to investment banking activities including JPMorgan (JPM - Free Report) , Bank of America (BAC - Free Report) and Citigroup (C - Free Report) are expected to benefit from the resurgence of M&As and IPOs.
Additionally, smaller players like Evercore Inc (EVR - Free Report) , Moelis Company (MC - Free Report) and Raymond James are likely to gain from the strong pipeline. Therefore, these companies are likely to witness a rise in both underwriting and advisory fees, going forward.
These Stocks are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Image: Bigstock
Resurgence of M&As and IPOs to Support Investment Banks
Global M&As were back with bang in the third quarter of 2020 as economic and business activities gradually resumed. During the quarter, dealmakers revisited transactions that were on hold as coronavirus wreaked havoc across the world.
Likewise, IPO activities rebounded, with the third quarter being one of the busiest since 2000. The green shoots of recovery were visible in last couple of weeks of the second quarter in both M&As and IPOs, with trend witnessing a significant upswing during the third quarter.
Details
Per the data provided by Refinitiv, the quarter witnessed more than $1 trillion worth of M&As deals worldwide, mainly driven by strong performance in September. The majority of the transactions were in the coronavirus-resilient sectors like technology and healthcare.
Also, the third-quarter deal activity was up almost 80% sequentially. Specifically, the United States witnessed 75% jump in deal volume, while Asia and Europe recorded spike of 67% and 21%, respectively.
M&A deals worth $5 billion or more received a major boost, with more than 35 such transactions announced during the quarter.
Talking about IPO activities, the September quarter was mainly dominated by IPOs in healthcare (almost 50%), technology and blank-check companies. Data from Renaissance Capital shows that the total amount raised through IPOs was nearly $28.5 billion from 81 listings.
Road Ahead
Sustained economic recovery and the Federal Reserve’s efforts to provide sufficient liquidity to the economy are likely to support merger activities, going forward. Despite the U.S. presidential elections looming, companies are considering means to diversify business to weather the pandemic-induced slowdown.
Also, companies are largely using stock as preferred acquisition mode, and preserving cash to tide over economic crisis. Further, private equity firms, which were largely on sidelines so far, have started deploying funds to make profitable investments.
Further, pipeline for IPOs remains strong. Stacey Cunningham, president of the New York Stock Exchange in an interview to Bloomberg TV noted that after record September, October is also shaping up for a frenzy of listings. Airbnb Inc. and DoorDash Inc. are among the big names likely to debut in the coming months.
How Investment Banks Stand to Gain?
Though the coronavirus crisis adversely impacted the economy for much of 2020, gradual revival of businesses and support from the central bank have led to significant rise in capital market activities.
Investment banks, which provide underwriting and advisory services for IPOs and secondary market offerings along with M&As, are definitely going to benefit from the rise in these activities.
Thus, big names in the industry like Goldman Sachs (GS - Free Report) and Morgan Stanley (MS - Free Report) along with those having significant exposure to investment banking activities including JPMorgan (JPM - Free Report) , Bank of America (BAC - Free Report) and Citigroup (C - Free Report) are expected to benefit from the resurgence of M&As and IPOs.
Additionally, smaller players like Evercore Inc (EVR - Free Report) , Moelis Company (MC - Free Report) and Raymond James are likely to gain from the strong pipeline. Therefore, these companies are likely to witness a rise in both underwriting and advisory fees, going forward.
These Stocks are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>