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When large investment banks report results for the first quarter of 2021, any of them that delivers weak revenues from equity capital markets (ECM) should brace for a backlash.
Dealogic numbers show that by mid March issuers had launched 557 IPOs worth $157 billion this year. Citi notes that a usual year would see around 100 to 200 by this point. They are a bigger source of revenues than M&A or debt capital markets (DCM).
The largest market has been the US, which accounts for $100 billion of that total with 303 deals. Of these, 74% relate to special purpose acquisition companies.
Last year, Spacs raised $83.3 billion, up from $15.5 billion for 2019 and an annual average of just $6 billion for the last decade. In just the first two-and-a-half months of 2021, they have already raised $47 billion.
The Spac business may look like the Wild West today … but expect it to institutionalize soon
Credit Suisse will be the biggest winner here, with a commanding market share ahead of second-ranked Goldman Sachs.