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Equity

Equity Capital Markets Awards 2020: A year like no other

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Last year GlobalCapital was forced to abandon our 2019 Equity Capital Markets Awards dinner because of the Covid-19 pandemic. Little did we know that what seemed like a brief crisis would transform all our lives in the way it has. But despite the huge pressure of the virus and its dramatic impact on stockmarkets, the equity capital markets rose to the challenge in 2020, enabling many companies to raise vital capital to mend broken balance sheets and even to complete IPOs, all without executives having to leaving their home countries — or even their homes. After an extraordinary year, GlobalCapital is pleased to recognise the truly outstanding achievements in ECM.

In a break from tradition, we changed the way we would recognise award winning deals in 2020. Instead of breaking down the market into categories, we asked market participants to nominate the very best deals of last year, of any kind — the ones they felt stood out from the rest of the pack.

These deals have been awarded the prize of Outstanding Equity Capital Markets Deals in 2020. The most popular deal in pitches and the poll is our Equity Capital Markets Deal of the Year.

Market participants voted in a poll, in which they nominated both the best deals they had worked on and the best they had not. Banks were also invited to directly pitch for the deals they thought deserved most recognition.

The winners were decided by GlobalCapital’s editorial team, based on both the poll and the pitches.

The editorial team also decided the winners of our Best Bank Awards. The best Non-Bank Market Participants were chosen by the poll. (Please see our awards write-up for a full list of winners.)

 

JDE Peet’s IPO sets trend

The €2.6bn IPO of coffee group JDE Peet’s won our award for Equity Capital Markets Deal of the Year. The transaction featured heavily in deal pitches and was the most popular deal in our ECM Awards poll.

The transaction, in May 2020, was the first major European IPO after the Covid-19 crisis began. It broke a number of conventions.

The deal was launched with cornerstone investors, a rarity in European IPOs before last year. JDE Peet’s also ran a tight virtual roadshow to offset the potential for market volatility. Radically, there were only three days of official bookbuilding, as opposed to the usual two weeks.

The shares initially soared above the offer price, although they have fallen back to around that level through a difficult first few months of 2021.

However, the features of the IPO, of securing cornerstones to back a deal early and a speedy virtual bookbuild, have been adopted by almost every other major IPO since, making JDE Peet’s not only the largest new listing in Europe of 2020 but also the most influential.

Two of GlobalCapital’s Outstanding Equity Capital Markets Deals in 2020 were IPOs that followed the JDE Peet’s model to great success.

The September listings of UK e-commerce company The Hut Group and Polish eBay competitor Allegro were both executed using brief online roadshows and were supported by early investor commitments, although Allegro chose to use unnamed anchor investors rather than named cornerstones.

Both transactions were heavily hyped over the summer and did not disappoint. The companies listed in London and Warsaw respectively to investor acclaim.

THG set its own trend, as the first in a wave of exciting, high growth firms that listed on the London Stock Exchange. The £1.9bn deal also showed structural innovation, as founder Matthew Moulding kept a golden share, giving him preferential voting rights and the ability to block a takeover for three years.

THG has been followed by the London IPOs of bootmaker Dr Martens, online card company Moonpig and online review site Trustpilot in 2021. Soon Deliveroo, the UK food delivery company, will join them on the LSE.

Allegro’s Z10.6bn (€2.3bn) deal was exceptional not just as a successful IPO. It proved that the equity capital markets have become truly international and that a company’s decision to list in even a less frequented domestic market such as Warsaw is no hindrance to completing a large IPO with strong international demand.

The last IPO to be recognised as an Outstanding Equity Capital Markets Deal was the €300m Paris flotation of 2MX Organic in December.

This deal marked a turning point when the craze for high profile special purpose acquisition companies finally hit Europe.

The backers of the Spac, which will seek to buy an organic food company, were Xavier Niel, the billionaire founder of French telecoms company Iliad and one of France’s best known investors; former Lazard banker Matthieu Pigasse; and Moez-Alexandre Zouari.

Zouari is the founder of Prodistribution Group, a partner of supermarket chain Casino, which owns 500 neighbourhood retailers such as Monoprix and LeaderPrice.

 

Rights issues show market resilience

Of course, much of 2020’s ECM activity was capital raising to get companies through the Covid-19 pandemic.

Few sectors were hit as hard as air travel, and two of our Outstanding ECM Deals were here.

The rights issues of International Consolidated Airlines Group for £2.7bn and Rolls-Royce for £2.3bn exemplified the drama of capital raising in the era of coronavirus.

The IAG rights issue was particularly challenging as the stock is listed in Madrid and London. The owner of British Airways and Iberia was also under huge pressure in late September when the deal was in the market, as Covid-19 cases rose after the summer and hopes of a revival in air travel receded.

Rolls-Royce faced similar problems, as well as intense speculation about the deal before launch, which drove down the aero-engine maker’s share price.

The marketing period also straddled a tempestuous US presidential election, which provoked jitters at some of the underwriters, leading Rolls to need a larger cohort of banks to back the deal.

Despite huge pressures on the transactions they were both overwhelmingly successful.

Not all 2020’s rights issues were for balance sheet repair, however. French railway car maker Alstom and Spanish mobile phone towers group Cellnex both completed transformational rights issues for M&A, showing that even in the depths of a pandemic investors can see through immediate difficulties to future growth potential.

The Cellnex transaction at €4bn was a huge transaction and especially impressive as it was just the latest of many massive capital raises undertaken by the acquisitive firm.

The deal was immensely popular: it was 46 times oversubscribed, with €185bn of orders.

Alstom’s €2bn rights issue gave it the firepower to complete its long-awaited acquisition of Bombardier’s trains division.

It proved that, even during a pandemic, good strategic M&A remains popular with ECM investors.

 

Green is great

All three convertible bonds that won Outstanding ECM Deal Awards played to the growing theme of environmental, social and governance investing.

Neoen, the French renewable energy company, launched the green convertibles market in EMEA with a €170m deal in May. The innovation was cheered by the market and since then the asset class has bloomed.

Électricité de France amazed the market in September when it issued a €2.4bn green convertible, the world’s largest issue of the product. The huge CB was printed alongside a €2.1bn hybrid capital bond, showing the massive demand for EDF’s credit.

The final Outstanding Equity Capital Markets Deal in 2020 was a €650m sustainability-linked convertible bond from Schneider Electric, the French electrical systems company.

For the first time in ECM, the deal was structured so that the issuer agrees to pay investors more if it fails to meet pre-agreed environmental, social and governance targets.

The transaction was a landmark moment for ECM and has sparked discussion about how sustainability-linked goals could be used in other equity issues.

For more details on our deal winners this year and for a full list of our bank and non-bank market participant winners please see our awards result story.

 

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