IPO bankers are often keen to take credit for working on large deals, no matter how marginal their involvement.
But anyone hoping to stand out in their next client pitch by referencing this year’s biggest initial public offering is likely to be disappointed: almost the entire sector seemed to be in the prospectus.
Corebridge, the life and asset management business of insurance group AIG, went public this week with help from 43 different banks, the second-highest number of managing underwriters for a U.S. listing on record, the data shows. collected by Jay from the University of Florida. Ritter.
The figures highlight a dubious habit among companies of using high-profile appointments more as a gift to bestow upon favored partners.
” They have [often] got a commercial deal with the vast majority of underwriters on the cover,” said a senior banker who did not work on the Corebridge offering. “They reimburse the financial institutions that are their partners.”
Equity market volatility and economic uncertainty have made 2022 a horrible year for equity markets. Corebridge was the first company to raise more than $1 billion via a U.S. IPO since January, and the deal has been closely watched to determine whether investors would have any appetite for a broader resumption of listings. before the end of the year.
In such a difficult environment, increasing the number of underwriters might seem like a sensible idea: it could help ensure that the share offering reaches as many potential investors as possible and spread the risk for banks that don’t want to be caught in the act. in case of calamity.
In practice, however, the banks at the top of the list will end up doing the vast majority of the work on any IPO, regardless of how many names are lower in the prospectus.
“The number of manager underwriters is more about Corebridge than the state of the market,” according to Ritter.
Corebridge’s top 6 bookrunners managed over 75% of the shares, while the bottom 15 made 1.5% between them. When Visa listed in 2008 – the last time a US company took on more underwriters than Corebridge – the top 2 bookrunners handled 50% of the shares offered, while the bottom 30 underwriters contributed 7%.
In theory, “co-managers” are chosen because they can provide good analyst coverage or complement the range of major bookrunners by providing access to a cohort of niche investors.
There are some positives, like creating opportunities for bands that have traditionally struggled to break into the industry. Corebridge said his union included 10 companies which he classified as “diverse”.
But some of the biggest companies on its list of underwriters aren’t well known for their U.S. IPO expertise. Natixis and ING, for example, won mandates despite only working two U.S. floats each in 2021 — the hottest year for equity markets in history — according to Dealogic data. .
The two banks were also co-managers of Corebridge’s $6.5 billion bond issue earlier this year.
Corebridge declined to comment on why it took on so many underwriters.
Record holder Visa was owned by a consortium of thousands of banks prior to its IPO, so it wouldn’t be surprising if the company had a particularly large number of companies it felt compelled to hire for the IPO. stock Exchange.
Likewise, the tumultuous recent history of Corebridge and AIG may have given it more advisers to thank than most companies. Since 2008, AIG has received and repaid a $182 billion government bailout while going through seven chief executives. He sold everything from Hong Kong insurer AIA to a Vermont ski resort, and went from planning life insurance acquisitions to cutting out the entire life insurance business as he jumped between several restructuring plans.
AIG chief Peter Zaffino told a conference last week that he “couldn’t be happier with the progress” the company has made on its latest turnaround, the Corebridge IPO. being one of the last steps in the creation of a specialized and lean insurance company. insurer.
Long-suffering AIG investors would be forgiven the company for hiring more banks to list than some companies needed for deals many times its size. The near-record number of subscribers was not enough to stop the IPO price at the bottom of its target range, as markets were rocked by inflation concerns in the final days of the IPO tour. presentation of the agreement.
Still, if the milestone finally marks the end of AIG’s nearly two decades of disruption, they might decide to give away a few easy paychecks on The Last Deal Was Worth It.