China investment banking activity generated US$4.7 billion in fees during the first quarter of 2021, up 16.6% from the same period a year ago, and represented the highest start since records began in 2000. The increase was driven by higher underwriting fees from equity capital market (ECM) transactions, which rose 153% to a record US$2 billion compared with the first quarter of 2020.

Figures released on April 9 by Refinitiv, a London Stock Exchange Group business, showed that debt capital markets (DCM) contributed the biggest amount of underwriting fees during the three-month period at US$2.1 billion, but they were 2.1% down from the corresponding period a year ago. Syndicated lending fees totalled US$462 million, up 64.1% from January-March 2020, while advisory fees for completed M&A deals plummeted to a seven-year low of US$150.3 million – down 51.2% year-on-year.

CITIC topped the league table for China’s investment banking fees with a total of US$350.5 million in estimated fees for a 7.5% wallet share of the total fee pool and up 24.8% from the first three months of 2020. Bank of China came next with US$322.6 million (up 1.9%), followed by China International Capital Corporation (CICC) with US$206.9 million (up 26%).

Chinese equity and equity-linked proceeds witnessed a record start and raised US$72.2 billion in the first quarter of 2021, a 142.8% increase compared to the same period last year. The number of equity offerings surged 75.7% from the comparative period last year, making it the busiest first quarter period ever.

Total initial public offerings (IPOs), including secondary listings issued by China-domiciled companies, has had its strongest-ever start to a year, and raised US$33.7 billion, a three-fold increase in proceeds from the first quarter of 2020 amounting to US$11.2 billion, as companies issued new listings at a record pace. A-share IPOs hit a decade-high with US$11.5 billion, up 25.2% from a year ago, alongside a 120.8% increase in the number of A-share issuances.

Chinese IPOs and secondary listings in Hong Kong – both on the mainboard and GEM – also saw a record start, raising US$18 billion in the first quarter of 2021, a significant increase compared with only US$1.6 billion in the same period last year. This was led by Kuaishou Technology’s US$6.2 billion IPO, making it the biggest equity offering globally during the first quarter of 2021.

Follow-on offerings amassed US$24.2 billion in proceeds, up 126.9% year-on-year. Chinese convertibles, or equity-linked deals, rose 81.7% from a year ago to US$14.4 billion, the highest start since 2019, when proceeds reached US$21 billion.

High technology accounted for 30.7% of the China ECM activity, raising US$22.1 billion in proceeds. This represented a 621.9% increase from a year ago. Industrials captured an 18.8% market share as proceeds amounted to US$13.5 billion, up 132.9% from the first quarter of 2020. Healthcare rounded out the top three sectors with a 15.4% market share worth US$11.1 billion in proceeds, or a 121.9% growth from a year ago.

CICC led the rankings in China ECM underwriting in the first quarter this year, with US$7.6 billion in related proceeds or a 10.5% market share, followed by Morgan Stanley with US$6.6 billion (9.2%) and CITIC with US$5.9 billion (8.2%).

Debt capital markets

Primary bond offerings from China-domiciled issuers raised US$466.7 billion during the first quarter of 2021, an 8.9% decline from last year’s record start of US$512.4 billion, as the number of bond issuances slowed down 21.3% year-on-year.

Bond transactions from the financial sector accounted for 37.5% of China’s bond proceeds with US$175.1 billion, up 4.5% from the first quarter of 2020. Governments and agencies captured a 34.1% market share and totalled US$159.3 billion, down 26.6% from the previous year. Industrials accounted for an 11% market share with US$51.3 billion in proceeds, up 42% from the comparative period a year ago.

CITIC topped the first quarter league table for China bonds underwriting with US$37.3 billion in related proceeds for an 8% market share, followed by Bank of China with US$29.9 billion (6.4%) and Industrial and Commercial Bank of China US$29.5 billion (6.3%).

The overall China-involvement M&A activity started strong this year with announced deals amounting to US$133.4 billion in the first quarter, an 80.1% increase compared to a low first-quarter period last year. This is the highest first-quarter period since 2016, which amounted to US$197.4 billion, in terms of value and a record start by the number of announced deals, which grew 58.4% year-on-year to 1,804.

Chinese outbound acquisitions reached US$16.1 billion, up 206.5% compared to a year ago, making it the highest first-quarter period since 2018, when the value amounted to US$22.5 billion. China is currently ranked sixth place among the most acquisitive nations for global cross-border activity this year, after being one of the largest acquirers of overseas assets during its peak in 2016. Chinese acquisitions along Belt & Road nations saw 17 deals with a cumulative total of US$1.1 billion this year, up 239.2% in value from a year ago, and accounted for 6.7% of the total Chinese outbound acquisitions.

Foreign firms acquiring Chinese companies amounted to US$8.4 billion in the first quarter of 2021, a 6% increase from the corresponding period a year ago, while the number of inbound deals grew 9.5% during the same period. Domestic transactions witnessed record activity with US$108.7 billion, up 93.5% in value from 2020, as number of deals increased 72.3%.

Deal-making activity involving China saw high technology as the most targeted sector, which captured a 22.5% market share valued at US$30 billion. This was up 277.2% compared to the same period of 2020 as the number of deals more than doubled. Materials sector followed close behind with a 21.2% market share and US$28.3 billion in value, which was up 155.8% year-on-year. Industrials accounted for a 16.8% market share with US$22.3 billion, up 126.4% from a year ago.

CITIC led the any-China involvement announced M&A league table during the first quarter of 2021, with US$21.8 billion in related deal value for a 16.4% market share. It was followed by CICC with almost US$21 billion (15.7%) and J.P. Morgan with US$7.5 billion (5.6%).