COVID-19 Urges Bankers from IPO to Emergency Capital Raises

Not a single European company listed in March on the stock exchange as the coronavirus spread across the continent, with bankers now relying on emergency share sales fees and rights issues to keep them in operation for the remaining 2020.

Bankers working inequity capital markets – the business of raising funds through the stock market – are predicting a horrible year for initial public offerings (IPOs) as concerns about the size of the pandemic’s economic effect weigh heavily on financial markets and harm the investors.

EY Global IPO Leader Paul Go said, “Given the COVID-19 outbreak and its negative impact on global economic activities, IPO markets are not expected to quickly rebound.”

“The best hope was for the market to attempt to reset during the summer months, despite these being typically slower,” he added.

Furthermore, head of Capital Markets Europe, Middle East, and Africa at law firm Baker McKenzie Adam Farlow shared his views, he said, “Secondary transactions are very much the topic of discussions (with clients) – particularly how to get to market with speed and in size, we are seeing numerous accelerated bookbuild transactions across the region and across sectors.”

Such accelerated bookbuilds (ABBs) in which shares are sold within a short-term window with little to no marketing were already common at the beginning of the year, but for very different reasons.

One standout trade was the Von Finck family’s CHF 2.3 billion ($2.4 billion) sale of a 12.7% stake in Swiss testing company SGS in early February. Credit Suisse managed the trade, the largest sole-led deal of its kind since March 2014.

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