RBC's J.T. Deignan and Neil Chawhan discuss the resurgence of insurance and BDCs in equity capital markets. They explore insurance pricing trends, IPOs, management competence, balance sheet strength, private credit influence, and the growth in IPO activities for alternative asset managers.
Insurance companies showing interest in IPO capital raising with successful transactions and significant post-IPO performance.
Increased investor interest in private alternative asset managers going public for growth opportunities in the asset management sector.
Deep dives
Increase in Financial Services ECM Activity
There has been a rise in insurance and BDC activity, leading to a growth in FIG ECM market. Insurance companies are considering moving towards IPO capital raising. The sector has seen successful transactions, with companies experiencing significant performance following their IPOs. BDCs have also shown increased activity in capital raising for growth.
Positive Sentiment in the Insurance Sector
The insurance sector is experiencing a favorable market with positive pricing trends. There is an upward trajectory in rates, although it varies by line of business. The market is seeing a need for additional rate to meet the cost of capital due to rising inflation and loss costs. Companies are focused on demonstrating a steady return on equity.
Impact of Private Credit on Public Markets
Private credit and direct lending have become influential in the financial market. Alternative asset managers are seeing increased interest from investors looking for investment opportunities in the asset management sector. Public BDCs are gaining support from institutional investors due to their business model and scalability. The market anticipates more private alternative asset managers going public to leverage their currency for growth.
Late 2023 saw a pick-up in equity capital markets activity in financial services. Insurance and business development corporations show particular promise for 2024, while there is keen investor appetite for a pipeline of alternative asset managers set to go public. RBC’s J.T. Deignan, MD and Head of Real Estate and Financial Institutions Equity Capital Markets, and Neil Chawhan, MD, Insurance Investment Banking, take a look ahead.
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