In previous FCS Intelligence reports, we’ve highlighted the growing role of foreign acquirers in driving M&A activity in the U.S. In today’s installment, we show that cross-border IB activity hasn’t been limited to M&A – it’s now a major factor in the IPO market as well. Cross-border listings comprised fully one-quarter of all U.S. IPOs in the last year, reaching the highest level in seven years. In the Life Sciences sector – a critical segment for many independent investment banks and new market entrants – cross- border listings represented a record 40% of U.S. IPOs. Since many of today’s IPO issuers will return to the ECM markets for follow-on deals, this cross-border trend will shape the direction of the ECM fee pool for years to come.
Bulge-bracket firms already have the global platforms necessary to effectively compete for cross-border listings. However, many smaller independents and universal banks have a very limited competitive footprint in the market. To keep pace with the market, they may need to invest in global client coverage – even if they have no intention of building out global distribution.