Fierce competition between investment banks to win big equity deals and boost their league table rankings has led to dangerously aggressive pricing on some deals. The tight discounts on accelerated and block trades has led to a number of banks losing money on the trades.
Accelerated sales larger than €1bn ($1.2bn) had an average discount between the offer price and the share price before launch in the most recent quarter of 2.5% â down from 4.3% in the first half. The average discount for all accelerated trades in the past three months was 4% â close to the 4.2% level for last year, according to a review of European equity capital markets in the third quarter by SG.
