EMEA Equity House: Bank of America

IFR Awards 2023
5 min read
Owen Wild

Breaking a sweat

Bank of America massively increased its share of EMEA ECM by leading jumbo accelerated bookbuilds as well as niche transactions as far afield as Oman in a diverse deal roster, making it IFR's EMEA Equity House of the Year.

Bank of America’s remarkable surge in dealmaking in the EMEA region in 2023 meant it was both most improved and number one in some ECM products.

Across equity and equity-linked the bank’s bookrunner market share leapt by 3.6 percentage points to 9.3%. However if US-listed shares are removed to give a clearer view of EMEA activity then Bank of America is comfortably the number one bank in the region with a 10% share, up a massive 4.2 percentage points in one year.

In recent years Bank of America had fallen behind the pack. An accurate view of the likely increase in secondary accelerated bookbuilds in 2023 and investment in recent years allowed it to overtake its rivals.

“While we all wanted an IPO market, we anticipated sizeable ABB situations and positioned for that,” said James Palmer, head of EMEA ECM.

In 2022 there were only two US$1bn accelerated bookbuilds in EMEA, and BofA was on one of them, yet in 2023 there were 13 and Bank of America was involved in 10.

Many of those were repeat transactions, with three jumbos in Heineken entities, three in LSEG and two in consumer health spin-off Haleon. The bank had a remarkable hit rate as bookrunner on all of them, plus the Belgian government’s €2.16bn sale in BNP Paribas.

It led jumbo sales totalling US$17.2bn out of US$21.9bn in total, and that’s ignoring the first LSEG trade of US$2.37bn on which BofA was a passive bookrunner.

BofA was also notable in the block business for winning auctions, running solo deals and finding new sellers. Canadian asset manager Mawer was a new name in ECM and hired BofA as sole bookrunner for a €67.6m ABB in Fuchs Petrolab that was driven by reverse enquiry. BofA was also sole on small sales in Unicaja Banco, Admiral and Soitec.

The bank was a regular winner of auctions by Qatar Holding, running sales in Vinci, Accor and Barclays. The latter didn’t clear but was sufficiently small that while Qatar selling caused some disquiet, the shares were trading above the purchase price a few days later.

Most audacious was the €920m sale by the Italian state of a quarter of Banca Monte dei Paschi di Siena a year on from a rescue rights issue. A limited competitive process led to BofA being mandated on the sale alongside Jefferies and UBS and the trio was able to upsize the deal from 20% to 25% of the world’s oldest bank having put together a book that was five times covered with orders from nearly 100 accounts.

“We are comfortable putting capital at risk. This is an informed view. When you get reverse enquiry that makes a difference. It is all about information,” said Palmer.

It is notable that while BofA achieved tight discounts for the sellers, average performance since is better than for most rivals’ roster of ABBs.

“[Blocks] is the theme of the year and we’ve smashed it,” said Andrew Briscoe, head of EMEA equity syndicate.

The IPO market struggled to recover in 2023 and most deals that completed in Europe delivered heavy losses to investors. BofA could claim to be on the best deals though as a global coordinator on Schott Pharma’s IPO – IFR's EMEA IPO of the Year – and a bookrunner on Hidroelectrica’s L9.33bn (US$2.1bn) IPO – IFR's Sustainable Equity Issue of the Year.

“Schott was not easy and the whole world’s watching. Planisware and Renk cancelled, and CVC didn’t come,” said Palmer.

In the Middle East, BofA was global coordinator on Dubai Taxi’s privatisation that set a record, with demand 130 times the US$315m deal size. Painfully the bank’s compliance department made it withdraw from the US$2.5bn IPO of Adnoc Gas over who the auditor was. The bank was, however, able to open Oman to many investors with the US$771m float of OQ Gas Networks, the largest in the country, with several rounds of pilot fishing introducing OQGN to more than 40 international investors and the non-local book ending 35 times covered. Most importantly, all four IPOs have traded up.

Primary ABBs have reduced the importance of rights issues but often they cannot be avoided and BofA showed its willingness to take on longer-term risk as a lead underwriter of the €1.825bn TUI rights issue that was complicated by the major shareholder being subject to sanctions in the EU and UK. The banks were well renumerated with a fee pot of 2.5%.

In structured equity, the bank climbed two places to second in EMEA with six deals, including top-line roles on the €1bn dual-tranche debut CB by Rheinmetall in January and the €500m exchangeable by RAG-Stiftung into German chemicals company Evonik Industries in November.

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