Private equity, M&A on the upswing while junk underwriting continues to surge.
By Marine Cole
November was the largest month for private equity since the onset of the financial crisis.
Total dollar volume topped $21.3 billion from 76 announced transactions, including one of the largest announced leveraged buyouts this year—the acquisition of Exco Resources for $5.3 billion, including assumed debt.
November also saw the largest monthly volume for announced leveraged buyouts deals since July 2007 when total volume reached $623.6 billion.
Mergers and acquisitions activity was also on the rise. It reached $212 billion in November and $2.1 trillion for year to date, up 38 percent from last year.
Banks like Barclays, Morgan Stanley and Goldman Sachs are benefiting most from the increase in deal activity.
Emerging markets continue to be hot for M&A, especially Russia, which was recently in the news for being selected as the host country for the 2018 soccer World Cup. One of the large deals this week was Pepsi's $4.1 billion acquisition of Russia's Wimm-Bill-Dann, which brought the volume of US acquisitions in emerging markets to $23.8 billion, up 94 percent from all of 2009 and making 2010 the biggest year for U.S./emerging markets activity since 2007.
M&A activity in Russia has totaled $52.9 billion this year, representing 19 percent of BRIC M&A in 2010 and tops among the group of rapidly growing countries that also includes Brazil, India and China.
The Pepsi deal also shapes up to be the company's biggest international acquisition in its history. When the deal closes, Russia will represent the beverage company's largest market outside the US, replacing Mexico, according to the New York Times.
In the debt capital markets, high yield continues to be on a roll. November was the largest month for high-yield corporate debt by number of issues on record.
Global high-yield issuance totaled $38 billion in November, bringing year-to-date proceeds to $298.5 billion, shattering all previous annual records, according to Thomson Reuters. With 86 offerings, November ranks as the busiest month for high-yield corporate debt by number of issues since records began in 1985.
Little surprise, high-yield underwriting fees went up with activity. They totaled $5.4 billion through November, a 77 percent increase over last year at this time.
JPMorgan Chase ranks first in overall debt underwriting fees this year, with generated $1.5 billion, including 37 percent from high-yield transactions.
Bank of America Merrill Lynch tops the list of high yield underwriters, with $556 million, slightly ahead of JPMorgan.
And it doesn't look like activity in the high-yield market is going to abate any time soon. The New York Times reported that low-rated American companies still have about $100 billion more in debt to refinance than analysts previously thought, according to Moody's Investors Service.
In the equity capital markets, November was the biggest month for global initial public offerings since December 2009, mostly fueled by the IPO of General Motors, with $133.6 billion for the month. Other large IPOs included Malaysia's Petronas Chemicals Group, Australia's QR National and Italy's Enel Green Power.