ECM: Equity Capital Markets
The Equity Capital Markets (ECM) department acts as an intermediary between market investors and the issuers of equity, or quasi-equity, as well as existing shareholders in a company who wish to sell a significant stake.
The types of transactions handled by this department include IPOs and new issues of shares or convertible bonds, as well as the sale of blocks of shares through what is known as a secondary market offering or an accelerated book building (ABB).
The Equity Capital Markets department, which generally includes origination, structuring and syndication teams, assists issuers or sellers in the structuring of their transactions, the preparation of investor communications, the drafting of regulatory documentation relating to the transactions, etc. It bears the risk of successful completion of transactions when a performance guarantee is required (in the case of a capital increase with preferential subscription rights, for example). Finally, it relies on market operators (equity salespeople) to organize the roadshows where transactions are presented to prospective investors.
The clients of the Equity Capital Markets department include companies, financial institutions, and investment funds, as well as public entities and governments in the case of privatization. In rare instances, clients can be private individuals or families who hold shares in a company.