Macquarie Group Ltd. (MQGDA) led equity underwriters in Australia this year for the first time since 2004 after winning roles on the biggest initial public offerings in its home country.
Sydney-based Macquarie held a 29 percent market share in equity capital market transactions in 2013, ahead of UBS AG (UBSN)’s 27 percent, data compiled by Bloomberg show. In mergers and acquisitions involving Australian companies, a late flurry of deals helped UBS regain the top spot for the first time in three years, the data show.
Macquarie’s showing was bolstered by a pick-up in IPOs in Australia, with 19 sales since Oct. 1 raising a total A$4.5 billion ($4 billion), the most since the fourth quarter of 2010. The bank was joint lead manager on the year’s two largest IPOs, Pact Group Holdings Ltd. (PGH) and Nine Entertainment Ltd., which raised a combined A$1.3 billion.
“We had a great window where both vendors and investors were getting a win-win,” said Hugh Falcon, co-head of equity capital markets at Macquarie in Sydney. Successful IPOs such as Virtus Health Ltd. and OzForex Group Ltd. (OFX) “sent a very strong message on the strength of the market and encouraged a number of issuers to consider bringing forward IPOs,” he said.
Macquarie shares rose 0.3 percent to A$55.13 in Sydney at 2:22 p.m., taking gains for the year to 58 percent, the most since 2009. The benchmark S&P/ASX200 index climbed 0.6 percent and is up 15 percent for the year.
Sydney-based Virtus Health Ltd. (VRT), which provides fertility services, gained 56 percent following its A$338 million IPO in June. OzForex, an online foreign exchange broker based in Sydney, has climbed 44 percent since its October sale, which raised A$440 million. Veda Group Ltd. (VED), a credit information firm, jumped 47 percent since its November share offering.
Macquarie and Goldman Sachs Group Inc. (GS:US) were the lead managers of the OzForex IPO. UBS and Morgan Stanley (MS:US) managed Virtus Health’s listing, while Citigroup Inc. (C:US) and UBS led Veda’s offer. Macquarie advised on 28 ECM transactions valued at A$5.52 billion this year, compared with UBS’s 23 deals worth A$5.09 billion, data compiled by Bloomberg show.
A stock rebound helped Australian companies raise A$19 billion through share sales this year, the most since offerings garnered A$34.7 billion in 2009, according to the data. Some 70 percent of the nation’s A$6.4 billion IPOs this year occurred in the fourth quarter as the benchmark S&P ASX 200 Index (AS51) of shares rose to a more than seven-year high on Oct. 28.
While the IPO tally was the world’s fourth-biggest in developed markets after the U.S., Hong Kong and London, the performance of recent Australian deals has lagged behind other markets. The share sales since Oct. 1 have risen about 3 percent on average since trading started, the data show. That compares with gains of 10 percent in Hong Kong, 26 percent in London, 29 percent in Japan and 36 percent for U.S. offerings.
“The barrage of IPOs in the fourth quarter has led to a market indigestion,” Shane Oliver, who helps oversee A$135 billion as head of investment strategy at AMP Capital Investors Ltd. in Sydney, said by phone. “Added to that, the recent pressure on the currency meant foreign investors stayed away.”
The Australian dollar has slumped 15 percent against its U.S. counterpart this year. Eleven of the IPOs since Oct. 1 are trading below their offer prices, according to data compiled by Bloomberg. Melbourne-based Pact has slipped 12 percent and broadcaster Nine has dropped 3.9 percent.
“Christmas is probably pretty well-timed for the investment community as there has been an element of fatigue through mid-December,” said Dane FitzGibbon, co-head of capital markets at UBS in Sydney. “The IPO pipeline is solid across a range of industries, but activity levels should moderate from the surge seen in late 2013.”
Among firms losing equity capital market share were Commonwealth Bank of Australia, which dropped to 14th from seventh last year and JPMorgan Chase & Co. (JPM:US), which fell four places to 10th.
In M&A advice, Royal Bank of Canada’s investment banking unit dropped to 37th place from fourth last year and Credit Suisse Group AG (CSGN) slipped to ninth from third, the data show. Merger transaction volumes of $89 billion are on track to exceed 2012’s $85 billion.
UBS handled M&A transactions worth $22.5 billion, giving it a 25 percent market share, the data show. The Swiss bank was one of two advisers to a group led by Australia’s Industry Funds Management Ltd. for a A$5.1 billion lease on Port Botany and Port Kembla. UBS also advised Insurance Australia Group Ltd. (IAG) on its A$1.85 billion purchase of Wesfarmers Ltd. (WES)’s insurance unit.
An indication of a potential increase in M&A activity is the competition for assets in some transactions, said Anthony Sweetman, head of corporate advisory at UBS in Sydney. He cited as examples the three-way takeover battle for Warrnambool Cheese & Butter Factory Co. (WCB) and two rival bids for an office fund controlled by Commonwealth Bank of Australia. (CBA)
“Next year is likely to be around the same level, maybe a bit higher,” Sweetman said. “The reason I am more positive on next year is the level of contested activity we are starting to see now.”
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