Issuance from UK companies in 2001 has been even better than last year, despite the global downturn in stock markets and investor appetite for new transactions. According to Dealogic Capital Data, there has been £16.6bn of equity issuance from UK corporates this year up to August 8, compared with £14.8bn in the same period last year.
Much of this year's deal flow, such as the £3.5bn Vodafone accelerated bookbuild, and the £2.5bn Friends Provident IPO, have come from large, established UK companies. This contrasts with last year when issuance was dominated by smaller, high growth companies on exchanges such as the Neuer Markt.
UK issuance has made up 38% of the European market, compared with 18% last year - despite there only being 36 UK deals so far this year, against 78 in the same period last year.
"The fact is that traditional equity capital raising is alive and well in the City of London," said Rupert Hume-Kendall, managing director of equity capital markets at Merrill Lynch. "Over 2001, the UK has stamped its authority on the European capital markets."
UK companies have continued to be active, and growth strategies need financing. RBS's £2bn placement was to finance an acquisition in the US, while Vodafone's deal financed the acquisition of British Telecom's stakes in Japan Telecom, the J-Phone Group and Airtel.
Some of investors' eagerness to invest in UK equities can be explained by fears about an impending recession. "Investors regard some UK companies as being less vulnerable to a downturn than their European counterparties," said Philip Ellick, managing director in UK capital markets at UBS Warburg.
But investors are still wary, preferring to invest money in secondary issues. In IPOs, investors are leaving it ever later before placing orders. In the Friends Provident deal, one investor placed an order for 10% of the deal just five minutes before the book was closed.
The UK market is more firmly established than its European rivals, with its companies further along the evolution process in terms of leverage.
"UK companies have been aggressively structured, and have not been over-capitalised," said Hume-Kendall. "When they have needed cash, the best way to raise it has been through equity."
Ellick agreed: "Over the last five years there has been a swing from companies being over-capitalised to now becoming over-leveraged," he said.
"Companies have been retiring equity through buybacks and replacing it with debt, but now companies are realising that it is equally important to be able to access the equity markets in order to finance corporate activity," he added.
Some banks are in a stronger position than others to profit from this change. Merrill Lynch, for example, has achieved a 40% market share in UK equities, including rights, over 2001.