APAC investment banking fees reach record $11.6b in H1

This is the highest value attained for a first half period since 2000.

Investment banking fees in Asia Pacific (excluding Japan) reached an estimated $11.6b in H1 2020, a 4.2% increase compared to the same period last year, reports Refinitiv. This is the highest value attained for a first half period since Refinitiv began its records in 2000.

Equity capital market (ECM) fees totaled US$3b during this period, a 35.7% jump from a year ago, and the highest first half period since 2015, and made up 26% of total APAC investment banking fees.

Debt capital market (DCM) underwriting fees amounted to a record $6.2b, a 6.8% rise and surpassing last year’s record period. DCM fees accounted for 53% of the overall APAC investment banking fee pool.

Things were more subdued in the M&A space, where fees generated from completed transactions fell to a six-year low of $1.2b, a 22.8% drop compared to H1 2019. It made up 10% of the region’s investment banking fees. Syndicated loan fees also declined 23.8% from a year ago to reach $1.2b and made up 11% of the fee pool.

Amongst lenders in the region, Bank of China took the top position for overall investment banking fees in APACin the first half of 2020, capturing 5.1% of the wallet share.

Record lows for M&A
The value of announced M&A deals involving APAC companies, excluding Japan, also reported a record low since 2013. As of end-June the value stood at $352.3b in H1 2020, down 14.5% from a year ago.

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

Majority of the deal making activity the real estate sector, which accounted for 15.3% market share at $53.8b. This is lower by 33.3% compared to H1 2019. Financials and Industrials followed behind and captured 15.1% and 13.9% market share, respectively.

On the upside, the period recorded one of the largest M&A deals on record involving Thailand: the $9.9b pending acquisition of Tesco’s Thailand operations by Charoen Pokphand (CP). CP Group also agreed to acquire the entire share capital of Tesco Stores (Malaysia) for $700m.

IPOs and Bonds
Initial public offerings (IPO) amounted to $30.1b in proceeds, up 31.1% from last year. According to Refinitiv, this was mostly due to Chinese IPOs, which accounted for 77% of the region’s IPO proceeds, and 40.4% of the IPO proceeds worldwide.

The $4.4b Beijing-Shanghai High Speed Railway IPO in January is the biggest IPO in APAC as well as globally for H1 2020. 

On the other hand, APAC convertible bonds raised only $21.2b over the same period and fell 38% in proceeds after witnessing a record first half period in 2019.

Asia Pacific Healthcare saw the highest equity capital raising so far this year at $18.1b, more than double the proceeds raised from H1 2019 and capturing 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, primary bond offerings from APAC-domiciled issuers hit an all-time high and raised $1.5t during the first half of the year, a 12.3% increase from a year ago. This is the strongest semi-annual period on record, according to Refinitiv.

Similar to IPOs, China accounted for majority of the bond proceeds, taking up a whopping 75% of the region’s proceeds or $1.1t. This is 13.3% higher compared to H1 2019. South Korea and Australia bond issuance followed, each capturing 6.6% and 5.1% of the market.

APAC investment grade bonds also reported a record-setting H1, reaching $830.5b during this period or 17.7% higher than last year. This was led by bond offerings from Government & Agencies, which captured 39.6% of the market share and raised a record $578b in proceeds. The latter is 11.4% higher than a year ago as the number of issuances saw one of the busiest periods and grew 28.5% year-on-year, according to Refinitiv.

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