US Banks Took In $645M in Equity Capital Market Fees This Year, Down From $5.3B in ’21

Big U.S. investment banks have taken a $4.6 billion revenue hit from the freeze on equity raisings, a Financial Times report said.

A drought in initial public offerings (IPOs) this year arrived with the recent volatility on the market.

Morgan Stanley, JPMorgan Chase, Bank of America, Goldman Sachs and Citi generated a cumulative $645 million from equity capital market fees thus far this year, per Dealogic data. That’s a decline from $5.3 billion in the same period last year.

The FT report says there wasn’t even one IPO in the U.S. between Feb. 17 and March 14 this year – the longest stretch outside of a holiday season since 2017, per Dealogic.

There was one small company that broke the streak last Tuesday (March 15), but bankers don’t think this represents a return to power for IPOs.

FT wrote that bankers had been preparing for a slowdown after 2021’s watershed year, when the first three months were notable for the number IPOs of special purpose acquisition companies (SPACs) there were.

FT said rising interest rate expectations, market volatility from the Ukraine war and bad post-listing performances from high-profile listings have dampened peoples’ expectations.

Read more: As Traditional Funding Sees Headwinds, Venture Debt Investments Set to Rise

PYMNTS wrote recently that there might be more venture debt coming due to the tighter finances and investors asking for higher returns on capital to make up for risk.

Capital is the lifeblood for a company, but especially for startups firms that are just getting off the ground.

The report says the pace of new IPOs has been lesser than usual so far this year. Venture capital has been around $10 billion lower in February as compared to January.