Best Equity Capital Markets Advisor — Rothschild & Co
Equity capital markets advisors had their work cut out for them in 2020. Throughout the year, their services were in high demand due to everything from Covid-related recapitalisations and marquee IPOs for technology-sector stars, to a resurgent equity-linked market, a boom in special purpose acquisition companies, and rising investments in unlisted equity.
With the sheer scale that rivals can’t match and its integrated, product agnostic approach, Rothschild & Co came out on top.
“Our scale and ability to deal with a huge diversity of different situations was particularly clearly illustrated in 2020,” says Adam Young, global co-head of equity advisory at Rothschild & Co. “We did some of the largest recapitalisations and we did some of the smallest and most complex ones. We worked on IPOs, we worked on big secondary offerings and equity linked as well.
“The greater the flow, the better your knowledge and we think being attached to that flow is a major differentiator for us from a lot of our rivals.”
The UK saw the bulk of European equity issuance in response to the Covid pandemic in 2020 — helped along by a relaxation of the Pre-Emption Group’s rules to allows distressed firms to quickly raise up to 20% of their equity capital without going through a full-scale rights issue.
“It was a big, big help for companies and one of the reasons why so much money was raised in the UK compared with a lot of continental European markets,” says Young. “But we also worked on situations where the distress was too deep even for the 20% rule to help.”
He cites recapitalisation situations such as managing a big rights issue for De La Rue, finding a cornerstone investor in a deal for Costain and bringing back the family founders to refinance N. Brown.
Among its larger deals, was International Airlines Group’s €2.7bn rights issue, launched in July and completed in October. “It was clearly a big recapitalisation in a sector that was incredibly challenged but it was executed very smoothly compared to other large deals where we weren’t advisor,” says Young.
“The one thing where we know we do well in all our teams is to negotiate the risk-taking with the underwriting banks in a very tightly-managed and disciplined way.”
When mergers and acquisitions activity resumed in the later part of the year, Rothschild & Co was again piloting some of the biggest ECM deals, such as working on the €2bn rights issue for Alstom to finance its purchase of Bombardier.
“Our capabilities are very integrated between the M&A business, the equity advisory business and our investor advisory business and our model proved to be very solid and very agile in a very difficult market environment,” says Francois Wat, global co-head of equity advisory at Rothschild & Co.
He points to a busy pipeline of IPOs on the way, particularly among the Covid ‘winners’ in the technology space. Working with SPACs to source investments as well as any additional equity is also a growth opportunity, one in which Rothschild & Co’s unrivalled links to private equity and product agnostic approach give it a big advantage.
“Equity advisory is integrated as a full product because what our clients want is to understand the exit — whether that’s an IPO, a SPAC, M&A, selling a minority to a pension fund, or a secondary sale,” says Wat. “We are solution agnostic and we just want to make sure that our clients get the best deal.”
Rothschild & Co is also using its ECM experience and network to find equity financing for unlisted firms with a specialist team sitting within global equity advisory, explains Young. “It’s fair to say that we’re working on a lot of transactions.”
Among those to have been made public so far was a deal for Starling Bank, the UK online-only neo-bank, which completed a £272m funding round in March led by four big institutional investors.
“We think that it is going to be a feature of the future and an increasingly important area of activity for our group,” says Young. “Our clients realise that you don’t always need a fully-fledged, integrated investment bank with sales and trading to do these capital market activities. We’re proud to be able to engage with clients on any type of capital market issue.”