Bloomberg News

BNP, Credit Agricole Knocked Off Top French Equity Sales Spots

December 07, 2011

Dec. 6 (Bloomberg) -- BNP Paribas SA and Credit Agricole SA were elbowed out of the top three rankings for French equity sales for the first time in three years by foreign banks. Societe Generale SA kept the No. 1 spot because of one deal.

French banks’ share of equity underwriting at home fell to 30 percent this year, the smallest piece of the pie since 2008, from 49 percent last year, according to data compiled by Bloomberg. BNP Paribas slid to the ninth spot from No. 3 and Credit Agricole fell to 11th from second. Deutsche Bank AG, JPMorgan Chase & Co. and Nomura Holdings Inc. shared the No. 2 ranking.

“When volume is low, strong international distribution is important,” helping explain the gains by the non-French banks, said Valery Barrier, Deutsche Bank’s Paris-based managing director for equity capital markets in France. “We’re not in a normal market.”

French companies raised 4.8 billion euros ($6.5 billion) from the stock markets this year, the smallest amount since Bloomberg started tracking the data in 1999. Companies steered clear of selling equity as Europe’s debt crisis prompted a 16 percent drop in France’s benchmark CAC 40 Index this year.

About 9.5 percent has been erased from the value of world equity markets this year as European leaders struggled to stop Greece’s sovereign debt losses from spreading throughout the region. The benchmark Stoxx Europe 600 Index is down 12 percent, the worst performance since 2008 when Lehman Brothers Holdings Inc. collapsed.

Shrinking Market

“Unless M&A activity picks up, there will be very few capital increases,” said Jean-Michel Berling, head of equity capital markets at Credit Agricole CIB in Paris. “Balance sheets are healthy and cash has piled up. The first half will likely be difficult.”

French equity sales represented 4 percent of European volume this year, down from 13 percent in 2009, according to Paris-based Societe Generale. Excluding so-called self-led deals, underwriters completed 29 issues, the lowest number since 2008. French equity-linked offerings slid to seven from 12 in 2010, according to Bloomberg data.

“The equity-linked market, which is one of the areas where we are particularly strong, was very weak mainly because the straight bond market was very dynamic,” Laurent Morel, global head of equity capital markets at Societe Generale in Paris, said in an interview.

French companies sold 180 billion euros of debt this year, the third most since at least 1999, Bloomberg data show.

Canceled IPOs

Two French initial public offerings were canceled this year as stock prices fell. Lagardere SCA delayed the offering of its Canal Plus France stake in March and Cie. de Saint-Gobain pulled the $1.1 billion IPO of its packaging unit Verallia in June.

“The biggest issue has been overall uncertainty, fueled by the sovereign-debt crisis, political movement and changing signals on the health of the worldwide economy,” said Jerome Renard, managing director and co-head of the European equity capital markets team at Nomura in London.

Societe Generale completed nine French issues for a total of 995.9 million euros, increasing its share of the market by 3 percentage points to 21 percent, Bloomberg data show.

Legrand SA, the world’s largest maker of wiring devices such as plugs and switches, picked Societe Generale last month to underwrite a 583 million-euro share deal. Legrand’s 1.15 billion-euro share offering was underwritten in March by Frankfurt-based Deutsche Bank, JPMorgan of New York and Tokyo- based Nomura.

‘Modest’ Offerings

“If you weren’t on the Legrand block, you were no longer in the race,” said Berling of Credit Agricole. Thierry Olive, head of equity capital markets at BNP Paribas, wasn’t available for comment.

Societe Generale has business coming through in France “because we also do deals of a modest size that others won’t do,” Morel said. The smaller offerings included the 56.5 million-euro IPO of Mauna Kea Technologies in July.

It’s too early to predict when the market will pick up, said Sylvie Sauton, head of equity capital markets for France at JPMorgan in London. “For the market to improve in 2012, a lot of elements must stabilize.”

Credit Agricole will try to recoup lost ground, Berling said. “If activity resumes next year, we hope to return to our position among the top three,” he said.

--Editors: Vidya Root, Frank Connelly

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net


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