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What is the COVID-19 impact on Q1 deal making?

Lucille Jones
Lucille Jones
Analyst, Deals Intelligence

Did COVID-19 impact Investment Banking in Europe during Q1? Deals Intelligence looks back at an extraordinary quarter for M&A and capital raising, including the trajectory of investment banking fees after a strong 2020 start.


  1. The COVID-19 impact on Q1 deal making trends in Europe was highlighted in the IPO market, with just nine flotations in March.
  2. After European M&A peaked at a 20-month high in February, the impact of COVID-19 market turbulence resulted in the figure being 35 percent lower in March.
  3. European investment banking fees fell 10 percent to a four-year low of US$5.2 billion in the quarter, with all asset classes at the lowest level since 2016.

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The headline figures for the first quarter of 2020 look fairly healthy in Europe. The value of announced M&A was up 74 percent year-on-year to US$302 billion, the second highest quarter for ten years.

Europe - Mergers and acquisitions

Equity market issuance was up 12 percent to $28 billion, and IPO proceeds tripled to $924 million. By most measures, 2020 looked set to be a busy year all round.

Now looking month-by-month: At $141billion, February saw the highest value M&A for 20 months. By March, with markets in sharp decline due to the COVID-19 pandemic, the value was 35 percent down, at below $93 billion.

The IPO market slammed shut, with just nine flotations in the month. In debt markets, January was the busiest month in two years, and March was the slowest since 2008.

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Watch: The Virus Effect on M&A — The Corona Correction

Investment banking fees

Investment banking fees in Europe followed the same trajectory.

Investment banking fees

After a strong start, with $2 billion earned in January, monthly fees fell for two consecutive months to total $1.5 billion in March, marking the second lowest March fee total in more than a decade.

Fees ended the quarter 10 percent down to hit a four-year low of $5.2 billion, with all asset classes falling to their lowest level since 2016.

Almost a quarter of fees were earned in the UK, followed by France with 13 percent and Germany with 11 percent. The financial sector accounted for one-third of earnings, and JP Morgan led the rankings, with $317 billion and a six percent market share.

The trends in Q1 deal making

During the quarter, European outbound M&A fell 19 percent year-on-year, its lowest level since 2015, but domestic and inbound acquisitions more than doubled to $237 billion, with the UK the most targeted nation in Europe and third in the world.

French companies remained active, with outbound deals rising five-fold year-on-year, driven by large deals such as Alstom’s $8.2 billion offer for train builder Bombardier, and French insurance group Covea’s acquisition of PartnerRe for $9.1 billion.

French - domestic M&A

Despite widespread fear souring stock market sentiment, the success of a small handful of candidates pushed IPO proceeds to $924 million, over three times more than a year earlier.

At $435 million, the London listing of British smart meter firm Calisen was the largest stock exchange debut in the region. Credit Suisse took first place in the European ECM underwriting league table during the first quarter of 2020.

Meanwhile, the Middle East bucked the intra-quarter trend.

While year-on-year figures are hopelessly skewed by 2019’s acquisition of Saudi Basic Industries Corp for $69 billion, monthly M&A has increased in value every month of 2020 so far, with March’s $6.1 billion marking the highest monthly total in 11 months.

At the beginning of March, Austrian oil company OMV announced that it would increase its stake in plastics maker Borealis in a deal worth $4.7 billion.

By contrast MENA debt market activity was more ‘on-trend’, with over $9 billion raised in both January and February, before plummeting to $570 million in March.

European debt issuance

European debt issuance totaled $595 billion in the first quarter of 2020, down nine percent year-on-year to hit a four-year low.

This was despite the busiest start to the year for bond issuance since January 2018. It was downhill from there, with March’s proceeds less than half January’s total of US$285.4 billion.

Europe - debt capital markets

Germany and France were the most active issuer nations, accounting for 21 percent and 16 percent of total bond proceeds, respectively.

LVMH launched the largest corporate bond sale of the year, raising $10 billion in February to help finance its purchase of jeweler Tiffany & Co.

JP Morgan took the top spot in the European bond bookrunner ranking, with US$45 billion of related proceeds, and a 7.6 percent market share.

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