Masters of the M&A universe rake in $84bn

Investment banking “masters of the universe” have racked up a massive $83.9bn (£54bn) in fees after a rush of floats and the best year for mergers and takeovers since 2007, new figures showed.

Huge deals and offerings including the record-breaking $168bn launch of the Chinese e-commerce giant Alibaba in September pushed fees for investment banking services up 7 per cent to a seven-year high, according to Thomson Reuters figures.

Fees remain some way off 2007’s peak of $101.8bn, but the revival in activity in the Square Mile and around the world is likely to herald a bumper bonus season for London’s deal makers and a shot in the arm for the capital’s property market.

Giles Hannah, senior vice-president of Christie’s International Real Estate, said: “In December we have seen an 18 per cent increase in new applicants working at investment banks registering to buy apartments in the City and W11 postcodes between £2m to £5m. These are from UK-based investment banks who know they are expecting higher bonuses compared to last year and who see London as a place to invest.”

Renewed confidence among the world’s biggest companies spurred multibillion deals in the healthcare, telecoms and consumer sectors, pushing up fees from completed M&A activity by 15 per cent to a three-year high. Banks were paid $26bn for advising on some of the largest mergers in years; these included the $66bn purchase by Actavis of Allergan, the Botox maker, creating a global pharmaceuticals giant. The mega-deal is also back, with two-thirds of deals exceeding $1bn.

In London, big moves including Aviva’s takeover of Friends Life and BT’s £12.5bn swoop for the mobile operator EE will boost investment banking earnings into next year, although the US dominated fees, accounting for 49 per cent of the total. Britain accounted for 5.4 per cent of global fee activity, followed by China and Canada with around 5 per cent each.

The top-ranking bank was JPMorgan – raking in $5.8bn up to last week – followed by Goldman Sachs and Bank of America Merrill Lynch, then Morgan Stanley and Citi. Although M&A accounted for 31 per cent of fees, income from capital-raising activities such as floats, new issues and private placements jumped 17 per cent to $20.7bn – the highest level since 2010, and representing 25 per cent of fees.

The value of floats worldwide jumped 50 per cent to $243.5bn. Including rights issues, $871.1bn has been raised this year – 10 per cent up on 2013 and the highest annual total since 2009.