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Jump in IPOs and M&As drives banks fees higher

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Vincent

The soaring number of share offerings, between IPOs and secondary offerings, and a considerable volume of mergers and acquisitions transactions at the beginning of the year are already very evident in investment banking revenues. The fee pool for the first half is 121.8% higher than in the same period last year, at $697.85 million, against $314.64 million in the first half of 2020. For some banks, it was even higher - JPMorgan, BTG Pactual, Citi and XP Investimentos tripled their numbers in the comparison.The beginning of last year was affected by the pandemic, but the pace now exceeds the beginning of 2019 as well. The numbers are from data Dealogic and they are not always a consensus among banks, especially as fees for M&As are estimated, but they provide a proxy for the market. Historically, the average annual revenue for banks in market operations in Brazil in good years is around $800 million to $1 billion, another clear indication of the market heating in a single semester."It’s an overheated year, in all products, and one that has accelerated a lot in the last two and a half months, after a slowdown due to Covid and political events," says Cristiano Guimarães, head of the investment bank Itaú BBA, who leads the fees ranking in the period.The flow of foreigners to the stock market has improved, although it is not as relevant as it was in the past. Last week, the American investment management company T. Rowe Price took part in two offers, Magalu’s secondary offering and the debut of Unifique - the company is already active in the country, but it had not been writing very relevant checks in initial offerings. GMO, which has also had a lot of presence in Brazil, was absent for months, and took part in Multilaser’s offering.There are offerings with greater price selectivity, some reducing the price band, others not materializing, some taking off with high demand, such as SmartFit and Armac. Banks consider this price dynamic to be natural. "Market insight has to exist and is healthy. It is not always that the investor and the entrepreneur will agree on value and perspectives", says one banker.On Tuesday the stock market was down, driven by China, and last week it was shaken by the fear of the advance of the delta variant of the coronavirus. In the...

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