Equity House: Barclays

IFR Awards 2023
9 min read
Anthony Hughes, Fiona Lau, Owen Wild

Big game hunting

In a year of jumbo transactions, Barclays was repeatedly involved in structuring and executing some of the most significant deals. Cross-border transactions, selldowns, IPOs and even a one-off trade in a rescued US bank showed the leadership of the UK bank. Barclays is IFR’s Equity House of the Year.

“Lead roles on big deals for marquee clients – that is what builds a franchise,” said Tom Swerling, global head of equity capital markets at Barclays.

And there is no denying that Barclays’ handprints were all over the year's trophy offering.

The bank staged one of the greatest investment banking coups in recent memory by grabbing a coveted top line role on 2023’s largest IPO, UK chip designer Arm Holdings' US$5.2bn Nasdaq debut in September.

The bank brought its impeccable global connections to the table, converted critical institutional orders and gave nuanced advice on timing and pricing to selling shareholder SoftBank and its CEO Masayoshi Son, and was in the room when the decision was made to price at the top of the range.

Barclays was no Johnny-come-lately to the situation. It served as corporate broker to Arm when the company was listed in London prior to SoftBank’s 2016 acquisition and had cultivated a strong relationship with management. The bank had also helped SoftBank set up a pre-IPO margin loan around its stake and boasted one of the top analysts in the semiconductor space.

“We had demonstrable market-leading expertise in helping the company write the equity story and think about how you position the company in the minds of the real thought leaders on the buyside,” said Swerling.

“We touched this transaction in so many ways, in addition to institutional investor engagement. This is absolutely at the core of what we do – [in this case] bringing a UK-incorporated company to the deepest capital market in the world in the US.”

Joe Castle, a 30-year investment banking veteran and Barclays’ global ECM syndicate head, goes further: “It’s one of our best deals … and we have done a lot of deals.”

Nearly all the 15 large institutional accounts that Barclays was responsible for in the testing-the-waters phase put in orders for Arm shares.

The two largest orders in the IPO were from accounts that Barclays was responsible for, Castle said.

The deal helped catapult Barclays into third place for US-listed IPOs in 2023 but the bank’s year was successful for other reasons too.

“If you look at the resume of transactions this year, I feel really good about not just the breadth of what we did but the quality of how we executed them,” said Rob Stowe, Barclays’ head of Americas ECM.

The bank priced the first US IPO of the year, the US$154m Nasdaq debut of Skyward Specialty Insurance in January.

Skyward proved one of the better offerings of recent years in terms of absolute performance (the stock more than doubled) and the company’s ability to return twice within the year with follow-ons – both led by Barclays.

“It's back to basics and really knowing who’s going to buy the merchandise you are selling and at what price and what size,” said Warren Fixmer, who heads the bank’s Americas FIG and real estate ECM business.

“Especially for small-cap products, you need to have far greater visibility and confidence in terms of where that demand is coming from and you can’t do that unless you have the trust of the buyside.”

In another milestone, the bank helped bring the first Mexican IPO to a US exchange in years, industrial landlord Vesta Real Estate’s June listing on the NYSE, and delivered a surprise US$148.8m follow-on in December.

Another standout transaction began when a large institutional investor called Barclays with a request. They asked Barclays to try to convince the US Federal Deposit Insurance Corp to dispose of shares it took in New York Community Bancorp as part of the latter's purchase and assumption of the assets and liabilities of the failed Signature Bank in March.

This involved Fixmer and Castle cold-calling the FDIC, which was keen not just on a smooth sale of NYCB shares at a good price but also completing a transaction that reinforced fragile market confidence in the regional banking sector. Barclays completed the US$393m sole trade in mid-May at a discount of just 1%.

Other trophy deals were the repeated sales of LSEG shares by the Blackstone-led consortium that previously owned Refinitiv – IFR's EMEA Secondary Equity Issue of the Year – and the two-stage sale of Heineken shares by Femsa – IFR’s EMEA Structured Equity Issue of the Year – in which Barclays designed the trades as adviser though they were executed by others.

They were ultimately jumbo accelerated bookbuilds, but also involved an exchangeable bond, call options and buybacks.

“We are presenting integrated cash and structured equity solutions, not just pitching the next ABB,” said Lawrence Jamieson, who is co-head of EMEA ECM with Foruhar Madjlessi who joined mid-year.

“We’ve shown flexibility in terms of roles and structures,” Jamieson said.

Jumbo accelerated sales had returned to Europe and Barclays was on the largest deals.

Equity-linked was more prominent in a rising rate environment and Barclays chalked up notable wins including Uber Technologies' US$1.5bn CB that saved close to US$40m of interest expenses annually, the first €1bn sustainability-linked CB for Italy’s Eni and a few weeks later the first exchangeable transition bond for Snam. It also sold US$3bn of paper for struggling EV maker Rivian across deals in March and October and it rode the wave of US utility issuance with lead roles for Duke Energy (US$1.725bn), CMS Energy (US$700m) and FirstEnergy (US$1.3bn).

The €1.825bn rights issue by TUI was the German travel company’s fourth equity raise since the pandemic and all the more notable as the 30.9% stake of its Russian major shareholder was frozen under European Union sanctions.

It hasn’t all been plain sailing with reopening IPO markets still fraught with risk. The collapse in shares of CAB Payments in the UK following a profit warning was chastening, with central bank actions rapidly and heavily impacting the business. It wasn’t alone, as results from French payments company Worldline a few days later prompted its shares to slump.

Barclays was proactive, putting CAB Payments' chairman in front of shareholders and others who nearly bought into the IPO to give confidence around the new guidance. Shares have risen about 65% from the low, the same as Worldline, and daily trading volumes are much higher though IPO losses are still around 75%.

Growing up fast

The bank has enjoyed rapid success with its arm's length entry into Australia via Barrenjoey. The Australian investment bank has been established for just over three years and yet climbed to the top spot in Australasian ECM in 2023, building on its expertise and unparalleled appetite for risk with a market share of 15.4%.

Barrenjoey is locally managed, with staff owning 45.4% of shares and 90% of votes, and partners with Barclays, which as a foundation investor owns 18.2% of shares. Australian fund manager Magellan Financial Group owns the remaining 36.4%.

The partnership means Barrenjoey has access to the UK bank's equities distribution and balance sheet.

The set-up allows Barrenjoey to act as a local market specialist, serving clients on the ground with a high flexibility and full autonomy in decision-making that was particularly important in a year with tight market windows.

The breadth of business was impressive. It arranged five of the 10 largest ECM transactions in 2023 and also raised A$9m (US$5.93m) for Caravel Minerals. The flexibility allowed it to remain active in what had been a quiet year.

Barrenjoey has also not hesitated to step in and support clients with its balance sheet when they needed a trusted adviser more than ever. It underwrote 14 block trades in 2023, far more than its competitors.

Same faces

Barclays traces much of its success in the past year to the continuity of its banking team when many of its rivals have undergone significant personnel changes, are understaffed or are more reliant on junior staff in their ranks.

“The thing we have is very consistent people in the seats,” Castle said.

“People really underestimate [the significance of experience] in the deal process but … we know how to do things. That’s why we take share in a tough market because anyone can do deals in a hot market. We have the right balance and a lot of quality people and we are very proud of the consistency of the people we have in ECM.”