At least a hundred companies around the world have delayed or canceled financing deals worth more than $45 billion since the invasion of russia from Ukraine
These include initial public offerings, bonds or loans, and acquisitions. us stock market deals were the hardest hit by global volatility in the first quarter, as a number of companies postponed their listings, while Japanese and European companies debt markets also suffered delays.
The disruption comes as the conflict roiled funding markets, hurt investors’ appetite for risk and increased uncertainty about growth, interest rate hikes and supply chains. The closed deals mean the feast on fees that bankers experienced last year may be about to turn into a famine.
“The volatility in the markets has made it more difficult to execute deals,” said Marco Baldini, head of the EMEA bond syndicate at Barclays Plc. High-grade bond sales tumbled as the war in Ukraine unfolded, but in a promising sign, “volumes picked up significantly as we approach Easter,” he said.
Some 50 companies have shelved their IPO plans since the end of February, of which nearly 30 were US-listed, including companies like Bioxytran Inc., Crown Equity Holdings Inc. and Sagimet Biosciences Inc. Total value is difficult to estimate of delayed IPOs. as most transaction sizes have not been disclosed.
The most notable delays with the disclosed amounts came from Asia and Europe. Olam International Ltd. postponed a primary listing of its food unit on the London Stock Exchange that would have valued the business at 13 billion pounds ($17.1 billion), while Chinese conglomerate Dalian Wanda Group Co. called off a planned Hong Kong IPO of its mall unit that was intended to raise around $3bn.
“Many plans for new offerings are likely to be shelved until there is a measure of calmer returns,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown Plc. “Timing is everything for an IPO.”
success of mergers and acquisitions
Mergers and acquisitions have not gone unscathed, with around 10 deals valued at more than $5 billion stalled since the war. That sent global mergers and acquisitions down 15% in the first three months of the year to $1.02 trillion, the lowest tally since the third quarter of 2020, according to data compiled by Bloomberg.
Microsoft Corp.’s $69 billion acquisition of video game publisher Activision Blizzard Inc. was one of the few mega deals, as the companies mostly shied away from big deals.
The worst drop was in Europe, where acquisitions targeting companies in the region fell 38%. UK Spectris Plc ended talks in March to buy Oxford Instruments Plc in a deal that would have been valued at 1.8 billion pounds. Peel Hunt Ltd. said the delayed deals will hit its investment banking revenue, while peer Numis Corp. also warned of a hit.
The impact of the war has been felt in global bond markets, where issuance is down 14% so far this year, according to data from Bloomberg. Eight issuers from Europe, including the Slovak Republic, utility company EnBW Energie Baden-Wuerttemberg AG and French financial firm Coface SA shelved more than $5 billion in bonds.
In Japan, seven companies, including Sumitomo Mitsui Construction Co. Ltd., Tohoku Electric Power Co. Inc. and Orix Corp., have withdrawn domestic bond issues totaling about $800 million. And in India, even the state-owned Indian Railway Finance Corp. Ltd. couldn’t help but delay its sale.
Other debt markets, including leveraged loans and asset-backed securities, are also struggling.
Callaway Golf Co. was marketing a $950 million loan before putting it on hold indefinitely in early March, citing market conditions. German eye care firm Veonet Group shelved a €795 million loan that was in syndication on the day the war broke out on February 24.
Even electric-car giant Tesla Inc. had to delay a sale of more than $1 billion in asset-backed securities in mid-March, while companies like Deutsche Bank AG had to suspend mortgage-backed business deals.
“The war in Ukraine is exacerbating existing supply chain constraints and driving up input costs for corporate borrowers, just as central banks are poised to tighten financial conditions in response to the worst inflation data in decades.” says Scope Ratings in a recent report.
This story has been published from a news agency source with no changes to the text. Only the headline has been changed.
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