Once an IPO finishes and the power brokers have pocketed their fees, the marketing spree begins. Assuming the offering was reasonably successful, the banks will roll out detailed case studies to prospective issuers. These documents hash out key aspects of the deal and, most importantly, how well they were able to package and sell it to investors.
Any client that is even only remotely related to the transaction – whether because their business is in the same country or industry sector, or simply because they might one day be in the market to sell or issue shares – will be targeted. These pitch books invariably discuss how a bank has “outperformed” fellow bookrunners in the IPO, particularly on the critical matter of selling.
There’s always a way to cut such numbers to show the firm in a good light – whether the analysis is done on the basis of demand, allocations, across one or more geographical jurisdictions or just looking at some categories of investors, for example, the famed “long-only” accounts that buy and hold stock. This is intended to demonstrate that the bank is the house of choice when it comes to similar transactions because it can do much better than others, when appointed alongside them in the same role. The message is not subtle.
But the buck doesn’t stop there. Most of the large investment banks will also position these deals as candidates for the awards that are regularly handed out by trade publications that are widely read in the industry. These are usually decided at the end of the year, as markets quieten down and people have a chance to reflect on their year’s triumphs. This is also the season when bankers are merry and, budgetary constraints notwithstanding, often prepared to shell out thousands of (U.S.) dollars to book tables at award events where their peers (and selected clients) can see them receive statuettes and soak up the glory.
There is something for everyone in these Olympiads where tuxedoed athletes compete in specialized events and where the flame from the bonfire of the vanities passes from equity capital markets to M&A to leveraged finance luminaries. Best equity deal in Korea? There’s an award for that. Best bank in Singapore? That achievement is also recognised. There are many trade magazines offering these awards, which generate cash in the form of advertising and table bookings, and they will create as many categories as can be justified. Everyone gets a little recognition.
The larger houses will often have someone in their communication department exclusively dedicated to pitch for these awards. The post-mortem books are widely and purposely adapted, and senior people lined up to comment on the unique features of the deals put forward as prospective recipients. It’s a bit like the Oscars – without the glamour, drama, paparazzi or good-looking people.
Of course, the shelf life of these deals continues. Importantly, much of this material can be further recycled internally to support claims made to team, regional or global heads for an increased year-end bonus, or to secure a promotion – like a never-ending Vedic wheel that takes fifty shades of greed.
After all, if you don’t tell people how great you are, how are they ever supposed to know?
Philippe Espinasse, a former investment banker, is the author of “IPO: A Global Guide” (HKU Press).
[This article was originally published in The South China Morning Post on 13 August 2012 and is reproduced with permission.]