It has been an exceptional year for stock sales in the U.S. It has been just as exceptional for bankers’ fees.

U.S.-listed equity capital markets offerings—encompassing initial public offerings, follow-ons, and convertibles—already have eclipsed the amount raised in 2000, according to Dealogic. Compounding that, bankers’ fees as a percentage of deal proceeds are running at the highest since 2000. Underwriters are earning 4.9% of gross proceeds in the U.S. as fees so far this year. That is almost half a percentage point higher than the average over the prior five years, Dealogic figures show.




The combination of more money raised and bigger fees implies that banks’ fee pool for U.S. offerings has already grown by some $5 billion over last year. In one indicator, investment bank Jefferies Financial Group reported last week that in its quarter ended in August, equity underwriting revenue was up more than 200% from a year earlier.

With many stock deals still to come—seven more U.S.-listed IPOs are lined up for this week, according to IHS Markit—investment banking is set to continue to be a silver lining for banks with big Wall Street arms in a difficult year.

It isn’t the trend toward special-purpose acquisition companies, or SPACs, that is driving this. In fact, SPACs are a bit dilutive to Wall Street’s fee haul. These offerings are earning an average of 5.4% in gross fees, lower than IPOs overall at around 6%, Dealogic figures show.

Instead, it appears that companies need banks’ selling skills more than usual. Gross fees for follow-on offerings, or sales by existing public companies, are on track to exceed 5% for the first time since at least 2000, according to Dealogic. In placid markets, stock sellers have the leverage to have banks guarantee execution, in so-called block deals; that sometimes carries lower fees and higher risks for banks. This year these blocks, also known as bought deals, are just 4% of U.S. equity offerings through last week, according to IHS Markit tracking data. Last year they were 17%.

The SPAC boom does augur well for banks in another respect, though: When those vehicles do eventually do acquisitions, the underwriters typically have dibs on advisory work, as well as any additional private capital raises for the deals. Regardless, 2020 is set to be an exceptionally good year for at least some bankers.