Let this be the autumn that ECM comes of age
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Let this be the autumn that ECM comes of age

The last two Septembers in the equity capital markets have been marked by frenzy and excitement. This autumn, at last, should be the one the market returns to normal — and the winners will be those that adjust their strategy to match.

It has been so long that participants have considered the equity capital markets to be normal that they could be forgiven for forgetting what it looks like. This September should be the time that they remember.

September has become a portentous month for ECM bankers. In 2012, it was after the summer that the markets roared back to life, and bankers let themselves believe that ECM could be fixing itself. The year after, with valuations at previously unimagined levels, was when they became sure — the primary markets were working again.

This September is set to mark another milestone in the revival of European ECM: The first time that positive sentiment and packed markets are the norm, and not remarkable in and of themselves. That is important because for the first year or two of the ECM renaissance the story was self-sustaining — the market's recovery was its own catalyst — but it is a tale that is getting worn out.

Instead, the market is ready to grow up, and start selling issuer stories on their merits rather than the those of the wider market. The grand narratives are dead, or dying: the BES mess showed the danger of blindly buying the southern European recovery, the lacklustre performance of the FTSE in recent months has demonstrated the futility of playing it safe.

Maturity brings nuance, and that is the quality that the market and its bankers should show as it grows up. The first big IPO to launch into the market was for the owner of the Dubai mall. The emirate has fallen out of favour in recent years, along with the rest of the Gulf. But its bankers are selling it as a specific, specialised play on tourism and luxury goods. The market is growing out of broad brush strokes and introducing finesse and complexity.

As such, the losers of the fourth quarter of 2014 will be those that carry on as before, allowing the swell of market sentiment to pull their deals along. It will work for a while. But as the market remembers what normal looks like, those that succeed will be the ones that realise that it is the unusual, new and exciting approaches that stand out.

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