Investment banking “masters of the universe” have racked up a massive $83.9 billion (£54 billion) in fees after a rush of floats and the best year for mergers and takeovers since 2007, figures showed today.
A raft of huge deals and offerings including the record-breaking $168 billion debut of Chinese e-commerce giant Alibaba in September pushed fees for investment banking services up 7% to a seven-year high, according to Thomson Reuters figures.
Fees remain some way off 2007’s peak of $101.8 billion, but the revival in activity in the Square Mile and around the world is likely to herald a bumper bonus season for London’s dealmakers and a shot in arm for the capital’s property market.
Giles Hannah, senior vice-president of Christie’s International Real Estate, said: “In December, we have seen an 18% increase in new applicants working at investment banks registering to buy apartments in the City and W11 postcodes between £2 million and £5 million.
“These are from UK-based investment banks who know they are expecting higher bonuses compared to last year and who see London as a place to invest.”
Renewed confidence among the world’s biggest companies spurred multi-billion deals in the healthcare, telecoms, and consumer sectors, pushing up fees from completed mergers and acquisitions by 15% to a three-year high.
Banks were paid $26 billion for advising on some of the largest mergers in years such as Actavis’ $66 billion purchase of Botox maker Allergan, creating a global pharmaceuticals giant. The mega-deal is also back, with the number of deals above the $1 billion mark representing around two-thirds of the total.
In London, big moves including Aviva’s takeover of Friends Life and BT’s £12.5 billion swoop for mobile operator EE will boost investment banking earnings into next year, although the US dominated fees, accounting for 49% of the total. Britain comprised 5.4% of global fee activity, followed by China and Canada with about 5% each.
The top-ranking bank was JPMorgan — bringing in $5.8 billion up to last week — followed by Goldman Sachs and Bank of America Merrill Lynch, then Morgan Stanley and Citi. Although M&A activity accounted for 31% of fees, income from capital-raising activities such as floats, new issues and private placements jumped 17% to $20.7 billion — the highest level since 2010, and representing 25% of fees.
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The value of floats worldwide jumped 50% to $243.5 billion. Including rights issues, so far this year $871.1 billion has been raised — up 10% on 2013 and the highest annual total since 2009.
