Investment Banking

The revenue in the Investment Banking market is projected to reach US$77.57bn in 2024.
It is expected to show an annual growth rate (CAGR 2024-2028) of -1.01% resulting in a projected total amount of US$74.47bn by 2028.

Definition:

The Investment Banking market is a crucial sector within the financial industry. It specializes in providing advisory services and facilitating financial transactions for corporations, governments, and other large institutions. Investment banks serve as intermediaries, helping clients raise capital through various means, including issuing stocks and bonds. They also offer expert advice on complex financial transactions, such as mergers, acquisitions, and corporate restructurings.

Structure:

The market contains the following KPIs: revenue, which encompasses the total revenue generated through investment banks’ advisory and intermediary services.

Additional information:

Within the revenue KPI, the revenue generated from asset management as well as commission and fee income are also included.

Corporate Finance Advisory Services
Brokerage Activities
Equity and Debt Underwriting
Principle and Proprietary Trading
Debt Origination
Loans

Private Equity Firms
Venture Capital Firms

The Investment Banking market depicts a strong emphasis on sustainability, a requirement for flexible risk management, and a swift adoption of digital advancements. The ability to adapt to shifting global policies, keeping a vigilant eye on geopolitical shifts, and adeptly handling currency fluctuations are essential skills for investors maneuvering through this dynamic environment.

Trends on the market:

Sustainability and ESG Focus: The Investment Banking market continues to witness a profound shift towards sustainability and ESG (Environmental, Social, and Governance) considerations. Companies, investors, and regulators are increasingly emphasizing sustainable practices, influencing deal structures and investment decisions.
Volatility and Risk Management: Heightened volatility persists as a defining characteristic of the Global Investment Banking landscape. Geopolitical uncertainties, economic fluctuations, and unforeseen events necessitate rigorous risk management. Robust hedging strategies and diversification remain fundamental for safeguarding portfolios.
Digitization and Technology Adoption: The pace of digitization and technology adoption in the Investment Banking sector accelerates. Fintech partnerships, blockchain applications, and advanced analytics are reshaping operational models. Adapting to these innovations is crucial for maintaining competitiveness and efficiency.

Underlying Indicators:

Global Policies: Regulatory shifts, tax reforms, and trade agreements play a pivotal role in shaping deal structures and cross-border transactions. Staying attuned to evolving policies is essential for strategic decision-making.
Geopolitical Events: Trade tensions, political instability, and regional conflicts can impact investment strategies and market sentiment. A nuanced understanding of geopolitical dynamics is essential for managing risk and seizing opportunities.
Exchange Rates: Fluctuations in currency valuations can impact deal valuations, financing costs, and investment returns. Employing effective currency risk management tools is vital for mitigating exposure to exchange rate volatility.

Data coverage:

Figures are based on the revenue generated by the Investment Banking market, as well as the transaction value, the number of transactions, and the average transactions size of the Mergers and Acquisitions (M&As) and Initial Public Offerings (IPOs) markets.

Modeling approach / Market size:

Market sizes are determined by a bottom-up approach and are based on a specific rationale for each market. As a basis for evaluating markets, we use market research and analysis, as well as data from annual financial reports. Furthermore, we use relevant key market indicators and data from country-specific associations and national data bureaus, such as GDP, wealth per capita, and total investment (% of GDP). This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. In this market, we use the HOLT-damped Trend method to forecast future development. The main drivers are GDP per capita and total investment (% of GDP).

Additional Notes:

The market is updated twice per year in the event that market dynamics change.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Investment banks provide important services for companies, governments, and other institutions, with the purpose of acting as a mediator between the parties included. Most of the largest investment banks globally, also known as “bulge bracket banks”, are full-service banks, providing a wider range of services to clients in addition to underwriting and advisory services, such as sales and trading, research, and asset management services. The investment bankers are compensated for their services through fees, which can take various forms depending on the agreement, but is usually made up by a cash fee paid when the deal has been completed, a fixed monthly fee, a success fee as a share of the deal value, or a combination of these fee types.

Mergers and acquisitions have become integral to corporate growth, with deal activity consistently showing robust numbers even amidst global economic uncertainty. Companies are increasingly looking beyond organic growth, seeking acquisitions or mergers to gain access to new markets, diversify their portfolios, achieve synergies, or enhance technological capabilities. The value of global M&A deals worldwide amounted to 2.5 trillion U.S. dollars in 2023, with the United States being the most dynamic market and accounting for more than half of the total. China's M&A activity, while tempered by regulatory scrutiny and geopolitical tensions, has grown significantly: Chinese firms have been targeting sectors such as technology and healthcare, both domestically and internationally, to support their economic growth. Emerging markets such as India and Brazil have also become attractive M&A destinations, particularly in sectors like consumer goods, technology, and energy.

An initial public offering, also known as an IPO or a stock market launch, is a pivotal step in the journey of a company. It refers to the debut of a company's stock on a stock exchange and allows external investors to buy shares in the company. Going public can yield high returns for the company itself and its investors, but it can also be a gamble. In fact, the equity returns of IPOs were twice as large as those from NASDAQ investments or even SPAC mergers in 2020, but returns were negative in 2021. Additionally, the share of companies that are profitable post-IPO has fallen in recent years.

IPO activity in the United States has seen dramatic fluctuations in recent years. The peak in 2021 set a record, with approximately 135 billion U.S. dollars raised due to a surge in tech companies and Special Purpose Acquisition Companies (SPACs) going public. However, this rapid growth was followed by a stark downturn in 2022 and 2023, which led countries like China and India to emerge as the leading IPO market, despite the U.S. being home to the largest stock exchanges worldwide in terms of market capitalization. The New York Stock Exchange (NYSE) and the Nasdaq Stock Market are also the most popular exchanges for international companies, having the highest number of foreign firms listed.

Investment Banking - Europe

Revenue

Analyst Opinion

Methodology

Financial

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