NEW YORK, May 24 (Reuters) – EF Hutton, the small investment bank that arranged a deal to list Donald Trump’s social media company, is dominating the IPO rankings as companies hold back on big deals by major Wall Street banks.
The New York-based bank, which was founded in its current form three years ago, has been ranked by Dealogic as the most productive IPO underwriter by transaction volume for three of the last four quarters, including the first quarter of 2023.
Traditional IPO powerhouses like Goldman Sachs Group Inc (GS.N), JPMorgan Chase & Co Inc (JPM.N) and Morgan Stanley (MS.N), on the other hand, have struggled to even make the top five of the league tables in recent years two quarters.
This is because EF Hutton specializes in advising shell companies called Special Purpose Acquisition Companies (SPAC) that go public through mergers, as well as other small companies that become penny stocks.
SPACs have fallen out of favor due to their poor overall financial performance and poor regulatory scrutiny, and their IPO volume is now a fraction of large IPO deals. But the absence of the latter stocks during a sustained period of market volatility has meant that SPACs and penny stocks have become the primary driver of stock listings.
Reuters graphics
According to Dealogic, EF Hutton helped companies raise $231 million in IPO proceeds in the first quarter. In the fourth quarter of 2021, the final quarter before the Russian invasion of Ukraine and rampant inflation that triggered a significant slowdown in the IPO market, leading underwriter Bank of America Corp (BAC.N) had contributed more than $5 billion collect US dollars.
EF Hutton, Goldman Sachs, JP Morgan, Morgan Stanley and Bank of America either declined to comment or did not respond to requests for comment.
Founded in 1904, EF Hutton grew into one of Wall Street’s largest brokerage houses before slowly falling apart in the 1980s and 1990s after a series of financial scandals and mergers. It was revived as a brand by KingsWood Holdings Ltd (KWG.L), a London-listed investment firm, which acquired the rights to the EF Hutton name in 2021, about a year after the investment bank was founded.
One of EF Hutton’s most famous deals was leading the IPO of Digital World Acquisition Corp (DWAC.O), the SPAC, which agreed to a $1.25 billion merger with Trump Media & Technology Group in 2021 . The deal has been blocked by US regulators and its future is in question.
Reporting by Echo Wang in New York; Edited by Richard Chang
Our standards: The Thomson Reuters Trust Principles.
Comments are closed.