News Article

APAC investment banking fees hit record $11.6 billion in H1

Investment banking fees in Asia Pacific (excluding Japan) hit a record $11.6 billion in H1 2020, an increase of 4.2% compared to the same period last year.

During this period, Equity Capital Market (ECM) fees totalled US$3 billion, a 35.7% spike from a year ago, and the highest first-half period since 2015, and constituted 26% of total investment banking fees for APAC.

The underwriting fees for the Debt Capital Market (DCM) amounted to a record $6.2b, a 6.8% increase which surpassed last year’s record period. DCM fees made up 53% of the total APAC investment banking fee pool.

Things were more subdued in the M&A arena, where fees generated via completed transactions slipped to a six-year low of $1.2 billion, a 22.8% decline compared to H1 2019. It accounted for 10% of the investment banking fees in the region. Syndicated loan fees also decreased by 23.8% from a year ago to reach $1.2 billion and represented 11% of the fee pool.

In the first half of 2020, Bank of China took the number one spot amongst lenders in the region for overall investment banking fees in APAC, securing 5.1% of the wallet share.

M&A record lows

The value of reported M&A deals involving APAC firms, excluding Japan, also reported hitting a record low since 2013. As of end-June 2020, the value of H1 stood at $352.3 billion, 14.5% down from a year ago.

The number of reported deals also fell to a six-year low and fell 14.9% from H1 2019.

The majority of the deal-making activity was in the real estate sector, which made up 15.3% market share at $53.8 billion. This has declined by 33.3% compared to H1 2019. 

Financials and Industrials trailed behind and took 15.1% and 13.9% market share, respectively. On the upside, the period has recorded one of the biggest M&A deals on record involving Thailand: the $9.9 billion pending acquisition of Tesco’s Thailand operations by Charoen Pokphand (CP). CP Group also agreed to purchase the entire share capital of Tesco Stores (Malaysia) for $700 million. 

IPOs and Bonds 

Proceeds of initial public offerings (IPO) amounted to $30.1 billion, an increase of 31.1% from last year. According to sources, this was mainly due to Chinese IPOs, which have accounted for 77% of the region’s IPO proceeds, and 40.4% of the IPO proceed around the world.

January’s $4.4 billion Beijing-Shanghai High-Speed Railway IPO is APAC’s biggest IPO, as well as globally for H1 2020.

On the other hand, APAC convertible bonds raised only $21.2 billion during the same period and dropped 38% in proceeds after seeing a record first-half period in 2019.

Asia Pacific Healthcare witnessed the biggest equity capital raising so far this year at $18.1 billion, more than double the proceeds raised from H1 2019 and taking 13.4% of the market share. Financials and Industrial followed behind with 13.3% and 11.7% market share for equity capital raising, respectively.

Meanwhile, during the first half of the year, primary bond offerings from APAC-domiciled issuers reached an all-time high and raised $1.5 trillion, a 12.3% rise from a year ago. According to sources, this is the strongest semi-annual period on record.

Similar to IPOs, China made up the majority of the bond proceeds, taking up a staggering 75% of the region’s proceeds or $1.1 trillion. This is 13.3% higher than H1 of last year. South Korea and Australia bond issuance followed, each taking 6.6% and 5.1% of the market share.

APAC investment-grade bonds have posted a record-setting H1, reaching $830.5 billion during this period or 17.7% up from last year. This was led by bond offerings from Government & Agencies, which took 39.6% of the market share and raised a record-breaking $578 billion in proceeds. The latter is 11.4% up from a year ago as the number of issuances witnessed one of the busiest periods and grew 28.5% year-on-year, according to sources.

The most prominent issuance offering during the period is the Australian Office of Financial Management, releasing a record US$12.2 billion bond offering in May.

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