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AmericasSeptember 3 2012

Can Europe emulate US small-cap sweet spot?

While some of the largest initial public offerings have attracted the wrong kind of headlines recently, investors can find value among genuine US growth companies but the UK is struggling to match this success.
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The top-tier investment banks may view the past year as a particularly stagnant one for equity capital markets (ECM), but in the US, there is one part of the market that is still definitely active. New York-based investment bank Jefferies used the previous ECM lull after Lehman Brothers in mid-2009 to make some key hires from the bulge bracket firms and build a broad growth companies franchise. Three years on, the bank was bookrunner on four initial public offerings (IPOs) in less than three weeks in July 2012.

“That’s a high run rate for us – or for anybody at the moment. When secondary markets are grim, everyone flees from the elevated end of the risk spectrum. But at the moment, Nasdaq is up about 12% this year, deals are getting done and done well. We’ve even seen two homebuilders raise money in the same week for the first time since 2003,” says Mark Connelly, global head of equity capital markets at Jefferies.

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