ECM 2018: what does the future hold in store? - Panel views from the Thomson Reuters IFR 2018 ECM & DCM Roundtable, 11th April 2018

We were delighted to have attended the latest ECM Roundtable this morning. The panel comprised:

  • Suneel Hargunani, Head of EMEA Equity Syndicate, Citigroup
  • Silvia Viviano, Head of ECM Execution, EMEA, JP Morgan
  • Luis Vaz Pinto, Deputy Head of Corporate Finance, Global Head of Equity Capital Markets, Societe Generale CIB
  • Craig Coben, Vice Chairman, Global Capital Markets, Bank of America Merrill Lynch
  • Christoph Stanger, Co-Head of ECM, EMEA, Goldman Sachs

What were the key issues discussed this morning?

 

The current environment
The overall environment for Equities remains still positive, despite macro and geopolitical pressures. A potential issue remains that funds are flowing into passive instead of active equities, which longer term may not be an ideal situation, and there remain other challenges including structural issues and the impact which social media can have. In general however, the view of the panel was positive.

 

Post-deal performance
We’ve seen that post-deal performance has been mixed – what are the reasons for this? Potentially an absence of momentum throughout the book-building phase is a contributory factor, while the panel felt that creating a valuation range for the deal which works for both issuers/vendors and investors can be a potentially larger issue. Allied to this, banks and advisors need to get the right mix including fundamental investors who are willing to take a medium term view rather than relying on passive investment.

 

Early-look and pilot fishing stages
Banks and advisors have historically accommodated investor requests for longer Early-look periods, but recent issuance has indicated that shorter periods could be favourable. Increasing the focus on fundamental investors, succinct Early-look periods followed by an increasing focus on thorough Investor Education and final presentations, cumulatively lead to more successful valuations and pricing. This will also help ‘natural selection’: good companies with good stories will prevail, with some IPOs falling by the wayside if they don’t convince investors sufficiently.

 

Investor feedback
Issuers and advisors ignore feedback from Early-look and ‘pilot fishing’ stages at their peril: deals are more likely to fall over as a consequence when companies are just not ready. Disciplined buyers plus receptive, sensitive vendors and issuers usually results in a more successful IPO. The panel felt that it was better to have ‘tough conversations’ at an earlier stage – but it’s equally important that all Syndicate members have an aligned message for management.

 

FCA reforms and regulatory issues
The panel discussed the impending FCA reforms, which were broadly seen as having a positive impact: for buyside investors to get more pertinent information at an earlier stage will only help de-risk the IPO. How this will play out – including increased interaction with unconnected Research analysts – remains to be seen. It was broadly felt that there’s still uncertainty over the likely impact of MiFID II. The panel also briefly discussed the role of independent IPO Advisors as being additive, especially where there’s a focus or a specific role such as with complex shareholding situations, where the independence of advice adds value.

 

Outlook
Expectations for the rest of the year remain positive, with M&A-driven equity raises and swing back from Emerging Markets to established Western European issuance helping what’s already a healthy pipeline.

 

Increasing your chances for a successful deal
Black&Callow provides solutions for Equity Capital Markets advisors and issuers which assist throughout the IPO process and beyond. From improving the Early-look and ‘pilot fishing’ stages through iRoadshow (our online investor roadshow platform with unique Page Level Reporting), through IPO Research Online (providing a faster, more accessible and more insightful platform for both connected and unconnected analyst Research publication) to global Prospectus financial typesetting, printing and distribution, we can help you maximise the chances for deal success. Contact Tim Black on 020 3794 1720 or [email protected] for more information