Dropbox
- RBC is off to a strong start in the US equity capital markets business this year.
- The firm jumped four spots from 10th to 6th on the US ECM revenue league table, leapfrogging Credit Suisse, Barclays, Deutsche Bank, and Wells Fargo.
- The Canadian bank generated $81 million in US ECM revenues in the first quarter, more than half of what it produced in all of 2017.
After trading closed March 23, Dropbox had plenty to celebrate: Its initial public offering had gone off smoothly, its value soaring to 36% above the $21 a share it had priced at. It's now trading at $30.56 a share, 45% above its IPO price.
But the tech firm wasn't the only one with cause to celebrate. The IPO capped off a stellar quarter for RBC Capital Markets, one of the banks handling the tech company's transition to the public markets.
The Canadian bank finished the quarter with $81 million in US equity capital markets revenue, according to data from Dealogic, jumping four spots to sixth on the league table. In the first quarter of 2017, by comparison, RBC finished 10th in US ECM revenue with $49 million.
Along the way to leapfrogging Credit Suisse, Barclays, Deutsche Bank, and Wells Fargo last quarter, RBC handled security firm ADT's $1.47 billion IPO, Americold Realty Trust's $834 million IPO, and Sempra Energy's $2.5 billion follow-on public offering.
How did RBC jump out to such a scorching start in 2018?
Michael Goldberg, the head of ECM in the US for RBC, credited a favorable market backdrop - especially for IPOs - in the first quarter, as well as some payoff from the firm's investments over the past seven to nine years in adding senior bankers to its US roster.
Thomson Reuters
"We have more people out there connecting with our clients, serving our clients, and bringing them solutions regardless of what their needs are. It's more people, but more talented people. Bankers with greater depth and longer-term relationships," said Goldberg, who added that more robust senior talent and improved lending relationships with clients "really has come to benefit the firm over the last couple years, and it was quite evident in the first quarter."
RBC, traditionally more focused on the US energy and natural resources sector, has also expanded the industries it covers. That was evident in the first quarter, when the ECM unit worked on big deals for companies in tech, real estate, and industrials.
"We're getting more prominent roles in transactions and also working on larger transactions - all as a result of the expansion of our US investment banking footprint," Goldberg said.
Though RBC's investment bank has a global presence, the US market comprises the bulk of its ECM revenues. And the strong quarter helped buoy more modest performance in other regions.
For instance, Canada, an unsurprising stronghold for the firm and powerhouse in the energy industry, had a quieter quarter in equity capital markets, falling to 8th from 6th in share of ECM deal value.
RBC nonetheless climbed from 11th to 10th in global ECM in the first quarter with over $100 million in revenue, according to preliminary figures from Dealogic.