2019 IPO Investment Bank "Post Autumn Soldiers": Head Broker Business Intensified Competition

With the closing of the year, the latest pattern of investment banking in IPO business is further clear.

In twenty-first Century, the economic report reporters statistics Wind data found that as of December 11th this year, a total of 191 single IPO projects will be issued, with a total scale of 246 billion 78 million yuan, and two data respectively increased by 96.91% and 84.63% over the same period last year.

The market is expanding, but in the field of IPO, competition between investment banks is becoming more intense. Reporter statistics found that the number of IPO top 7 brokerages monopolized the project resources of not less than half of the year. At the same time, with the advent of the registration system reform, the marketization of the issue price and the demand for investment also brought greater difficulty to the development of small and medium brokerages.

In the industry view, the formation of carrier class brokers and the steady advance of registration system reform may further enhance the market concentration of brokers in the IPO field.

Matthew effect intensifies

Although the scale of the market has doubled, the competition in investment banking in IPO has been further concentrated on the head traders. According to the twenty-first Century Wind report, only 50 brokerages realized the issuance of IPO projects in 2019.

Among them, CITIC Securities, CITIC investment and CICC three brokerages ranked 1, 2 and 3 in the IPO business, and the two brokerages accounted for 11.68%, 8.88% and 7.48% market share in the IPO field by 25, 19 and 16 projects respectively.

Statistics also show that in 2019, the number of the top 7 brokerages in the IPO project (CITIC, CITIC, Dongxing, Zhongjin, GF, China Merchants, Guoxin and Dongxing) amounted to half the total number of IPO projects in the year.

In stark contrast, in the 50 brokerages with IPO projects, the market share of not less than 30 brokerages is not more than 1%, and the number of items is not more than 2.

This means that projects in the IPO field are further concentrated on the head broker. The difficulty of developing small and medium brokerages in the field of IPO is increasing.

"The advantage of the head broker is further playing in both the understanding of the policy, the experience in dealing with the project and the capital operation capability." "This trend will become more and more obvious, especially in the A share market registration system reform," he said. "The more projects you make, the more competent you will be to meet potential listed projects." in Beijing,

Some investment bankers also pointed out that the prominent performance of some head brokerages in the IPO field stems from their ability to "lose money to do business".

"Medium and small brokerages have higher requirements for project profitability. At least the project is profitable for a cycle, but on some large projects, Party A is obviously more powerful, and the head office has to fight for projects in order to underwrite the scale or even pay for it, but for small and medium-sized brokerages, it is very difficult to get such an opportunity." A listed brokerage firm in Shanghai admitted that "there are many big projects this year, almost all of this."

In addition, the demand for investment and the increase in the size of the remaining shares of the underwriters have further increased the demand for capital strength of the investment banks. In this dimension, small and medium sized brokerages are clearly pulling the gap with the head broker.

Wind data show that in 2019, the Underwriters subscribed for 186 remaining shares, totaling 177 million shares, and two indicators were 1.90 times and 6.10 times the same period last year.

"The size of IPO in 2019 was almost doubled than that in the same period last year, but the situation of subscribed shares has reached about 6 times that of the same period. This shows that on the one hand, IPO is going further towards the issue pricing of marketization, and on the other hand, it has put forward higher requirements for the capital capacity of investment banks." The analysts said frankly, "especially the demand for investment of the science and technology board is unfavorable to the investment banking business of small and medium brokerages."

However, some of the former strong investment banks have fallen behind. Last year, IPO, the third largest Chinese company in the field of the field, performed poorly in the IPO field, with only 6 initial projects. The market share also dropped from 9.82% last year to 2.80%, and its share shrank by more than 7.

Ke Chuang plate pattern

As the first year of the opening of the science and technology board, the IPO market share of the science and technology board has undoubtedly attracted much attention.

In twenty-first Century, the economic report reporters found that although CITIC Securities had the largest number of items in the entire IPO market, but in the science and innovation board link, CITIC Securities and Guoxin Securities, Guotai Junan three institutions were tied to second projects with 7 projects, while CITIC investment securities ranked 11 in the first place in the IPO market.

"At present, there are many internal incentive mechanisms for many companies, and the whole industry attaches great importance to this accumulation." A head broker in Beijing said

The reason why it has a high degree of attention is related to the higher average sponsorship underwriting income of the science and technology board project.

According to the statistics of Wind, the proportion of underwriting income of the science and technology board project is obviously higher. As of December 11th, the total amount of the 65 projects that had been issued in the year amounted to 4 billion 470 million yuan in the cost of sponsorship and underwriting, and the average underwriting fee of the single project was 69 million yuan, which was 13 million yuan higher than the average recommended underwriting fee for all projects in the same period.

"Traditional IPO because of 23 times the price limit, leading to the investment bank's work is basically in the material, do not worry about the issue." Aforementioned Shanghai investment bankers said, "Ke Chuang plate not only needs to check and comb financial indicators, but also needs to make clear the company's business model, and more market-oriented pricing, and has a higher demand for investment bank teams. At the same time, it also requires investment banks to choose among all kinds of projects."

In addition, the experience of Ke Chuang board will bring more advantages to the registration system reform of the gem and even the main board market.

"The successful listing experience of the science and technology board is of great help to the companies listed in the Shenzhen Stock Exchange after bidding for the future registration system." The investment bankers said, "because IPO is not too small for the issuers, choosing a team with project experience is also a probability event."

However, there are also people in the industry who believe that the head broker of Guangdong and other Southern China areas is expected to get faster development opportunities in the future registration system reform of Shenzhen Stock Exchange.

"In fact, it also follows the exchanges and regions. Many of the listed companies in Southern China may be waiting for the registration system reform of the gem, and on this kind of project, the advantage of Guangdong's head broker is more obvious." The above non silver financial analysts said, "do not rule out the registration system reform, this kind of certificate chamber of Commerce has better project opportunities."