Top Banks in bid to revive London floats
THE CITY’S biggest banks have launched a major charm offensive in an effort to kickstart London’s faltering market for multi-million pound fundraisings.
Top banks have held talks with big institutional investors to discuss how to improve the way in which companies are taken public.
“Are we happy with the IPO market? Not at all,” said Oliver Holbourn, head of the equity capital markets syndicate at Bank of America Merrill Lynch.
“We’ve been to speak to investors and we’ve made constructive suggestions as to how we can change the IPO process. Whether that comes to anything, I don’t know,” he added.
Sources close to several other large investment banks said all the main City banks including Goldman Sachs, Morgan Stanley and Barclays Capital were having similar conversations with the investment community. And a big fund manager said they too were involved in talks.
The development marks a thaw in the relationship between advisers, investors, bookrunners and financial sponsors, which has experienced the worst breakdown in living memory. BofA said it suggested several ways of reviving the IPO market, including: greater transparency over fees – including whether incentive fees are paid for successful floats; starting a dialogue with companies looking to float up to three years before they wish to go public; and encouraging candidates to appoint independent board directors well before the IPO process begins.
Earlier this month, a special investigation by City A.M. revealed that key players in the IPO market were effectively at war, with IPO advisers STJ accusing book-runners of talking down the price of companies.
Unrest in the City was first exposed in a scathing letter sent by BlackRock about the state of the London IPO market. Only a handful of new company offers have got away as planned so far this year, with the majority of firms having to cut their price or pull their flotation. Tracey Pierce, head of primary markets at the London Stock Exchange, said: “The BlackRock letter and the discussion since then has prompted a more robust debate and brought the matter out into the open.”