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How have capital markets fuelled record fees for investment banks?

Matthew Toole
Matthew Toole
Director, Deals Intelligence

Any reasonable commentator might have predicted some mean-reversion in capital markets activity during 2021 after the pandemic-fuelled bonanza of 2020. But our Dealmakers Sentiment Survey pointed clearly towards even more growth ahead across many parts of the market and we saw investment banks enjoy record fees during H1.

  1. H1 2021 saw global investment banking fees surge to record levels to hit $79bil. Among investment banks, JP Morgan was the leader with an 8.3 percent share while Goldman Sachs secured a 7.6 percent market share.
  2. Global equity issuance was up by half to a record $686bil, while global M&A hit new heights of $2.8trn that was driven by U.S. targets.
  3. During the period, white-hot debt markets levelled off (in the stratosphere), with overall volumes slipping 8 percent to $5.3trn.

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Global investment banking fees surged by more than a quarter in the first six months of 2021 to hit $79bil, the strongest opening half since records began.

The Americas drove much of the increase, rising by one-third to take 55 percent of all fees globally. Strong showings from the UK and France pushed EMEA fees up 20 percent to $18bil, with a very similar rate of growth and fee-take in Asia.

Among investment banks, JP Morgan retained the top spot for fees earned globally, taking $6.6bil for an 8.3 percent market share, followed by Goldman Sachs, which accounted for 7.6 percent of the market.

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How did equity markets fuel fees for investment banks?

Equity markets captured the limelight, surging by 50 percent globally in the first half to raise $686bil globally – the biggest opener since records began.

The market for initial public offerings (excluding special-purpose acquisition companies (SPACs) surged to more than three times their 2020 level, to surpass $200bil. This was another first-half yearly record, as companies that had held off during the height of the pandemic rushed to the IPO window.

U.S. exchanges saw a 237 percent increase in IPO activity, while China-domiciled IPOs doubled to reach an all-time high of $60bil.

The market for follow-on equity was also robust, with almost 2,400 offerings raising $362bil, 21 percent up year-on-year, and the strongest opening first half since 2015.

U.S. issuers captured 31 percent of the market, an increase of 8 percent year-on-year (and precisely the average predicted increase by U.S. respondents to our Sentiment survey). Meanwhile, Asia-Pacific companies ramped up their equity issuance by 80 percent to reach a record $253bil.

Debt levels off, high-yield up

Debt capital markets saw a slight levelling off from its stratospheric rise during 2020, with overall volumes down 8 percent to raise $5.3trn globally, with a marginal 2 percent fall in the number of issuances.

Investment grade debt saw the largest retraction, falling 18 percent, partially offset by a surge in high-yield, which more than doubled to reach a record $400bil.


Regionally, the U.S., the UK and China accounted for three-quarters of the high-yield market in the first half of 2021. Meanwhile, Asia local currency bond offerings reached $1.4trn during the first half of 2021, a 4 percent increase compared with a year ago and the strongest first half for issuance since records began in 1980.

Buyouts and SPACs drive M&A

After a very subdued 2020, M&A professionals were tentatively holding out for a renaissance in deal activity – and they have not been disappointed.

Worldwide M&A hit an all-time high of $2.8trn in the first half of the year, up 131 percent year-on-year and the strongest opening six-months since records began in 1980. While other parts of the capital markets saw a levelling off in Q2, for M&A it was the largest quarter since Q2 2017.

The U.S. dominated activity, rising 249 percent year-on-year to reach $1.3trn, the strongest opening six-months on record. The U.S. accounted for 47 percent of global M&A, and that is despite all regions experiencing healthy growth, with Europe up 39 percent, Asia-Pacific up 84 percent and Japan hitting a 14-year high of $48bil.

Between them, private equity investors and SPACs have captured almost one-third of all M&A activity so far in 2021. Private equity-backed deals accounted for 18 percent of the market, to hit an all-time high of $533bil, double the same period last year, and 76 percent higher by number of deals.

Financial sponsors and their portfolio companies generated more than $8bil in fees, driven by exit activity. Blackstone Group enjoyed strong growth to become the largest financial sponsor, while Goldman took the largest share of sponsor-related fees.

Meanwhile, the popularity of SPACs continued, raising $387bil, which accounted for 14 percent of the M&A market.

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