Investment banking fees in Asia disappointed during the first quarter as the number of initial public offerings dropped to its lowest level since the height of the global financial crisis in 2009.
Across the North Asia market, Dealogic data shows that the $1.3 billion fee pool was 9% smaller than the opening quarter of 2012 — an even worse result than Europe’s 8% drop. Revenue in Southeast Asia showed a modest 2% rise, but at $352 million is barely more than a quarter the size of the North Asia market. India was somewhere between the two, suffering a 4% drop in investment banking revenues to $162 million across the subcontinent.
Overall, that is a 6.6% drop in fees across the three main Asian markets. So far, that has played to UBS’s advantage. The Swiss bank is comfortably leading the Asia revenue league tables with $120 million of fee credit from Dealogic. That is largely thanks to a strong lead in equity capital markets — where it has earned more than twice as much as second-placed Goldman Sachs — but was also supported by second-place spots in debt and M&A.
HSBC is in a distant second place on Dealogic’s Asia (ex Japan) fee table, driven almost entirely by its debt business, which was responsible for $67 million of its $89 million in league-table credit. Citi is a close third thanks to a slightly more balanced performance, with a leading position on the M&A fee table and fifth place in debt.
Meanwhile, investment banks in the Americas have enjoyed a stronger start to the year, with fees up 11% in North America and 9% in Latin America and the Caribbean, according to Dealogic.
Thin IPO volumes are the main source of poor performance in Asia. New listings raised $3.4 billion across the entire Asia-Pacific (ex Japan) region, down 52% on the first quarter of 2012 and the lowest quarterly volume since the second quarter of 2009.
This decline was somewhat offset by a doubling in the volume of equity-linked deals and a 23% rise in accelerated offerings, which is mostly block trades. There was also an increase in the size of deals, with 13 equity offerings of more than $1 billion, including five from Chinese issuers, the biggest of which was Industrial Bank’s $3.8 billion follow-on in January.
The picture in the region’s debt capital markets was somewhat better. Lucrative high-yield deals were up 93% on the first quarter of 2012, led by a record $9.7 billion from Chinese issuers. (See this week’s capital markets roundup for equity and debt league tables.)
M&A was mixed. China volumes rose by 6%, but Southeast Asia, which enjoyed a bumper year during 2012, was down by 20% despite the continued popularity of Malaysian targets.
