Bankers on preliminary public choices are sometimes eager to take credit score for engaged on high-profile offers, nonetheless marginal their involvement.
But anybody hoping to face out of their subsequent shopper pitch with a reference to this yr’s largest preliminary public providing is more likely to be disenchanted: nearly the entire business gave the impression to be within the prospectus.
Corebridge, the life and asset administration enterprise of insurance coverage group AIG, went public this week with the assistance of 43 totally different banks, the second-highest variety of managing underwriters for a US itemizing on file, in accordance with information collected by the University of Florida’s Jay Ritter.
The numbers spotlight a questionable behavior amongst firms of utilizing prestigious appointments extra like a present to be bestowed on favoured companions.
“They’ve [often] got some business arrangement with the vast majority of underwriters on the cover,” stated one senior banker who didn’t work on the Corebridge providing. “They’re paying back the financial institutions that are their partners.”
Stock market volatility and financial uncertainty have made 2022 a horrible yr for fairness capital markets. Corebridge was the primary firm to lift greater than $1bn by means of a US IPO since January, and the deal was intently watched as a check of whether or not buyers would have any urge for food for a broader revival in listings earlier than the top of the yr.
In such a tricky atmosphere, rising the variety of underwriters may appear to be a wise thought: it may assist make sure the share provide reaches as many potential buyers as doable, and unfold the chance for banks who don’t need to be caught carrying the can in case of a catastrophe.
In follow, nonetheless, the banks on the highest line will find yourself doing the overwhelming majority of the work on any IPO whatever the variety of names decrease down the prospectus.
“The number of managing underwriters is more about Corebridge than the state of the market,” in accordance with Ritter.
Corebridge’s 6 greatest bookrunners dealt with greater than 75 per cent of shares, whereas the underside 15 did 1.5 per cent between them. On Visa’s 2008 itemizing — the final time a US firm employed extra underwriters than Corebridge — the highest 2 bookrunners dealt with 50 per cent of the shares on provide, whereas the underside 30 underwriters contributed a mixed 7 per cent.
In concept, “co-managers” are picked as a result of they will present good analyst protection, or complement the breadth of the lead bookrunners by giving entry to a distinct segment cohort of buyers.
There are some positives, equivalent to creating alternatives for teams which have historically struggled to interrupt into the sector. Corebridge stated its syndicate included 10 companies that it classed as “diverse”.
But a number of the bigger firms on its underwriter checklist are hardly recognized for his or her US IPO experience. Natixis and ING, for instance, gained mandates regardless of every engaged on simply two US floats in 2021 — the most popular yr for fairness capital markets in historical past — in accordance with Dealogic information.
Both banks had been additionally co-managers on Corebridge’s $6.5bn bond providing earlier this yr.
Corebridge declined to touch upon why it employed so many underwriters.
Record-holder Visa was owned by a consortium of 1000’s of banks earlier than it went public, so it might not be stunning if the corporate had a very giant variety of firms it felt obliged to rent for the IPO.
Likewise, Corebridge and AIG’s tumultuous current historical past could have given it extra advisers to thank than most firms. Since 2008, AIG has obtained and paid again a $182bn authorities bailout whereas churning by means of seven chief executives. It has bought every little thing from Hong Kong insurer AIA to a Vermont ski resort, and pivoted from planning life insurance coverage acquisitions to carving out the entire life insurance coverage enterprise because it jumped between a number of restructuring plans.
AIG chief Peter Zaffino informed a convention final week that he “couldn’t be more pleased with the progress” the corporate had made in its newest turnround, with the Corebridge IPO one of many final steps in making a slimmed down, specialist property and casualty insurer.
Long-suffering AIG buyers can be forgiven some irritation on the firm for hiring extra banks for the itemizing than some firms wanted for offers a number of instances its dimension. The near-record variety of underwriters wasn’t sufficient to cease the IPO pricing on the backside of its goal vary, as markets had been rocked by issues about inflation through the closing days of the deal roadshow.
Still, if the milestone lastly marks an finish to AIG’s close to twenty years of disruption, they could determine making a gift of just a few simple paychecks on the final deal was value it.
nicholas.megaw@ft.com
Source: www.ft.com