Asia's capital raising rush delivers record fees for banks in third quarter

Hong Kong

ASIA's equity capital markets generated a record pay day for investment bankers in the third quarter, bolstered by surging appetite for technology deals and a rush to list on China's new Star Market, Refinitiv data showed.

Asia-Pacific, including Japan, saw bankers garner US$3.6 billion in equity capital market (ECM) fees in July-September, up 145 per cent from the same period a year earlier. The previous peak was US$3.5 billion in the fourth quarter of 2009.

Bankers are also preparing to fatten their pay packets when Ant Group raises up to US$35 billion in a dual listing in Hong Kong and Shanghai likely in October.

"Global capital markets are working. An enormous amount of money is available worldwide," said Aaron Arth, head of the Asia ex-Japan financing group at Goldman Sachs. "All signs point to a steady desire and need for capital."

Total equity market capital raised in Asia in the quarter climbed 148 per cent to US$133.8 billion. ECM fees account for almost 40 per cent of the region's investment banking wallet, versus 25 per cent globally, making it a hotly contested business.

The strong showing means the US$6.9 billion in fees raised in the region in the first nine months of 2020 have surpassed the US$6.15 billion generated for all of last year.

While all major banks saw their earnings rise, Chinese banks benefited most from new listings on the Nasdaq-like Star Market.

China International Capital Corporation became the region's top revenue earner for the first time, tripling its fees to roughly US$405 million in the nine-month period.

China-led IPOs accounted for 44 per cent of IPOs in the world for the first three quarters with US$57.4 billion worth of deals, more than double the amount for the same time last year.

Led by a US$7.5 billion secondary listing for Semiconductor Manufacturing International Corp, there were 62 Star Market listings that raised US$14.7 billion in the third quarter, according to Refinitiv.

"In Asia, there has been an acceleration in technology and digital adoption because of Covid and that is leading to these deals coming to the capital markets in full force," said Udhay Furtado, Citigroup's co-head of Asia Pacific equity capital markets. REUTERS