According to a Financial Times report, major US investment banks have suffered a $4.6 billion drop in revenue from the freeze on raising capital.
Recent volatility in the market has seen a drought in initial public offerings (IPOs) this year.
According to Dealogic data, Morgan Stanley, JPMorgan Chase, Bank of America, Goldman Sachs and Citi have earned a combined $645 million from equity capital market fees so far this year. That’s down from $5.3 billion in the same period last year.
According to the FT report, there wasn’t even an IPO in the U.S. between Feb. 17 and March 14 this year — the longest stretch outside of a holiday season since 2017, according to Dealogic.
There was one small company that broke the streak last Tuesday (March 15) but bankers don’t believe it represents a return to power for IPOs.
FT wrote that bankers braced for a slowdown after the turning point of 2021, when the first three months were notable for the number of special purpose acquisition companies (SPACs) IPOs.
FT said rising interest rate expectations, market volatility from the Ukraine war and poor post-listing performance from high-profile listings have dampened people’s expectations.
Continue reading: As traditional financing faces headwinds, venture debt investing will rise
PYMNTS recently wrote that more venture capital may emerge due to tighter finances and investors demanding higher returns on capital to offset risk.
Capital is the lifeblood of a business, but especially for start-ups that are just getting started.
According to the report, the pace of new IPOs so far this year has been slower than usual. Venture capital was down about $10 billion in February compared to January.
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