Over the first quarter of 2019, total investment banking fees in Europe came to a relatively meagre $4.9bn. The drought in equity capital markets (ECM) transactions, down 39.8% on the same period last year, and M&A, down 27.6%, have proven to be the biggest drag on the fee pool. Though debt capital markets (DCM) activity also declined, the drop was less pronounced at 13.6%. As a result, DCM accounted for nearly 40% of the fee pool, a larger than usual proportion.
A look at the value of announced M&A transactions with any European involvement paints a bleak picture. At $183.2bn, it is down 64% on the first quarter of 2018 and at a six-year low. The decrease is seen in intra-European deals, inbound and outbound merger activity. The most attractive target industries so far this year are the materials sector, accounting for a 17.6% market share by value, followed by hi-tech, at 13.8%. The latter is the most popular in terms of number of deals, with 453 transactions announced.
European debt issuance, especially investment grade, has slumped, though not quite as badly as the equities side. Germany stands out as the top issuing European nation, followed by France and the UK. In terms of sectors, government and agencies top the charts at 43% market share with financials in second place at 38.4%. Overall, the materials and healthcare sectors have gained market share on the first quarter of 2018, with most of the growth coming from a decline in fees from financials.
