THE dramatic recovery in risk appetite should mean more mergers and capital raisings, and a wave of flotations later this year, according to senior European investment bankers at JPMorgan.
However, JPMorgan also said its investment banking rivals, like investors, were again getting a taste for danger, echoing the “foolishness and foolhardiness” in the years leading up to the financial crisis.
“We are seeing a wall of liquidity in every asset class in the capital markets,” Viswas Raghavan, the bank’s head of international capital markets, said at a media briefing in London yesterday.
“For the first time in a long time, every asset class is wide open… this has not been the case for almost 18 months now.” He added the bank was “bracing ourselves for the next IPO wave”. He said these initial public offerings (IPO) could come as early as the fourth quarter, and would be led by private equity companies taking strong portfolio companies public, and corporations spinning off units.
Hernan Cristerna, JPMorgan’s head of mergers and acquisitions (M&A) for Europe, the Middle East and Africa (EMEA), said the bank expected more mergers and aquisitions in industries with solid credit profiles, and more industrial partnerships involving sovereign wealth funds.
However, Raghavan said he also detected the first signs of “the foolishness and the foolhardiness which accompanied the raging bull market of two years ago”, with rival banks pressuring prices and margins to win business in equity capital markets.
JPMorgan faces competition from rivals including a beefed-up Barclays Capital, which is on a hiring spree.