When we started thinking about the timing for a roundtable, we thought the first half of September would be a fantastic time to do it, because it would coincide with a market lull. We were totally wrong.
We’ve had Alibaba launch [and subsequently price] its IPO on the New York Stock Exchange. We’ve had Citizens Financial launch another multibillion dollar IPO. And we expect a number of sizeable IPOs to launch in the coming weeks.
Capital markets are undergoing seismic shifts that are often hard to fathom.
The pursuit of returns in an era of low interest rates has meant record levels of funds being invested in equities.
Investors have poured US$87.6bn into US equity funds so far this year, including ETFs, on top of the US$213bn inflow last year.
Stocks, as measured by the S&P 500, have returned some 40% since the start of 2013, yet many strategists fear that the market is due for a correction, led by the sudden reality of more hawkish monetary policies on the part of central banks worldwide. Somewhat worryingly, credit investors are at the same time starting to become a bit more circumspect.
Nevertheless, equity capital markets have served as a useful source of liquidity for investors. Companies and financial sponsors have already raised US$180bn this year through equity and equity-linked capital market transactions, including IPOs, follow-ons and convertible bond issues.
Including the Alibaba IPO, the volume of dollars raised through IPOs in 2014 is at levels not seen since 2000.
The IPO market also reflects broader technological innovation. Some of this year’s most successful IPOs include automated driving software developer Mobileye and enterprise software developer Zendesk, both of which have doubled since their market debuts. Life sciences companies represent the largest industry by number of IPOs and hold the potential to revolutionise healthcare worldwide.
Elsewhere, the promise of US energy independence has resulted in a boom in capital spending, requiring capital not only on the part of explorers, but also infrastructure to process and transport production.
Of course, there is also a new generation of finance companies, banking the growing economy, including the likes of Synchrony Financial, Ally Financial, and Santander Consumer USA.
US corporations have sought to add shareholder value through accretive acquisitions, benefiting from ready access to both low-cost credit and equity-linked financings – among them Tyson Foods, Exelon and NRG Yield.
Members of this year’s panel have been instrumental in many of these financings.
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