Record year for Investment Banking

In 2020, Carnegie participated in more Equity Capital Market transactions than any other Investment Bank in Europe and took the biggest share of the IPO market in the Nordics. Read the interview with Ulf Vucetic, Head of Investment Banking Nordics, below, where Ulf reflects on Carnegie’s last year’s performance, the market growth in Private Placements and how Investment Banking integrates sustainability in the business.

Despite a turbulent market, Investment Banking reported yet another record year in 2020. Once again, adaptability, product breadth, satisfied clients and strong networks solidified Carnegie’s position as the best investment banking adviser in the Nordics.

2020 began with a strong market, characterised by generally high activity in corporate transactions in both the private and public markets. The stock market was vibrant, financing opportunities good and transaction flow strong. The market situation changed abruptly in March 2020, however, when it became clear that Covid-19 was developing into a serious global pandemic.

Carnegie participated in more Equity Capital Market transactions (86) than any other investment bank in Europe.

The pandemic had significant impact on Investment Banking operations in the second quarter of 2020. Heightened uncertainty about the financial performance of numerous Nordic companies and generally lower transaction certainty brought many transaction processes to a halt. In addition, there were fewer new business initiatives among our clients regarding IPOs and major company sales, for example, which had adverse impact on transaction volume overall. On the other hand, many Carnegie clients responded to the uncertainty by choosing to strengthen their balance sheets through Private Placements in the equity market. As a result, transaction volumes remained high despite the challenging market during the first wave of the pandemic, especially for Carnegie, which has a particularly strong position in Private Placements.

Carnegie was able to deftly manage the high level of activity even during the pandemic, partly due to the outstanding flexibility of the staff, and partly because we were already accustomed to working with digital meetings in various forms.

In another trend that accelerated in 2020, more companies raised financing through private placements rather than IPOs. Carnegie has achieved a unique position in the market through its full-spectrum distribution capacity, ranging from large institutions to small private investors. In this respect, our strong Private Banking is a key distribution channel, while Private Banking clients benefit from being offered unique and attractive investment opportunities in unlisted companies. This reciprocity strengthens both business areas.

Prospera recognised Carnegie as the number one Corporate Finance Adviser in the Nordics for the fifth consecutive year.

The first wave of the pandemic subsided after the summer and many M&A and IPO processes resumed and the business mix in Investment Banking normalised. Credit operations, which were weak during the first half, also ended on a strong note in pace with general market recovery. High level of flexibility and strong capacity to allocate resources to the types of transactions and markets where activity is highest enable us to mitigate short-term volatility in individual markets.

At the end of the day, however, client trust is the critical factor in our success

The power of this capacity was clearly demonstrated in 2020, when Carnegie Investment Banking was able to report its best year ever in terms of both income and profit, in spite of turbulent markets and intermittent total shutdowns for certain types of transactions. At the end of the day, however, client trust is the critical factor in our success and it is therefore gratifying that our clients named us the best Investment Banking adviser in the Nordics for the fifth year running. We also came in first in all three subcategories (ECM/M&A/DCM) in Sweden. At the end of the year, Mergermarket recognised Carnegie as the Sweden M&A Financial Adviser of the Year.

Development was varied for our four offices in the Nordics, due mainly to the differences in the business mix among the units. Sweden, our biggest unit, had the best momentum, but we also advanced our positions in other markets.

The Euronext Growth marketplace (formerly Merkur) in Norway has taken off in earnest and, thanks to our expertise and experience in IPOs and secondary offerings, Carnegie has established a strong position in the Norwegian market for high-growth companies. Going forward, we believe there is still great potential in the segment in Norway. We participated in several major transactions in Finland.

The first half of the year was weak in Denmark, which is more focused on private M&A, but this was followed by a strong end to the year.

The performance of our various product classes varied. Equity Capital Market transactions (ECM) were very strong, with a high number of Private Placements in the first half and more normalised operations in the second half. Corporate transactions (M&A) were softer in the first half, but there was marked volume growth after the summer.

There is an ongoing change in the credit financing market, with a shift from traditional bank loans towards financing via direct lending funds. This increases the complexity of negotiating loans and thus creates a greater need for advisory. This is a growing segment in which Carnegie has gained ground and we see promising potential ahead.

Ulf Vucetic, Head of Investment Banking

How does Investment Banking integrate sustainability?

ESG and sustainability are essential elements of client advisory in Investment Banking. For Carnegie, this is about working with clients who have come a long way in terms of ESG, but is also about showing the potential for creating value through ESG. Companies that run their businesses well with regards to aspects such as the environment, business ethics and diversity are valued more highly, which our clients profit by, of course.

What is driving market growth in Private Placements?

Demands for immediate liquidity after share issues have subsided in recent years, which opens the door to a large market that we call Private Placements, investments in unlisted companies, where Carnegie has unique distribution capacity in the Nordics. We reach the full range, from major institutional investors in the Nordic region and abroad to foundations, institutions and private investors that are smaller, but where there is an appetite for transactions. This is an excellent example of how the entire bank works together.