Finance from the Front Lines in 2021

Video

Moderated by Markus Brunnermeier. Liz and Markus discussed current trends in the world of finance – the challenges and opportunities corporations and investors are focused on as we emerge from the COVID era.

Ms. Myers is a Managing Director and Global Chairman of Investment Banking, Equity Capital Markets at J.P. Morgan, where she has worked for 27 years. Prior to her current role, she served as Global Head of Equity Capital Markets where she led the team responsible for advising J.P. Morgan’s corporate clients on equity capital raising (IPOs, follow-ons and convertible issuance) in the Americas, Europe and Asia.  She has been named one of the Top 25 Most Powerful Women in Finance by American Banker magazine and one of Barron’s 100 Most Influential Women in U.S. Finance.

Ms. Myers serves on the Executive Committee of Women on the Move at J.P. Morgan, which supports female employees and women-run businesses. She serves on the Advisory Boards of the Bendheim Center for Finance at Princeton University and the Harvard Graduate School of Education. Ms. Myers is  a National Board Member of the Posse Foundation which expands the pool from which top universities can recruit young leaders from diverse backgrounds.  She is also a Board Member of New Yorkers for Children, a nonprofit with a focus on youth in foster care.

Ms. Myers graduated cum laude from Princeton University in 1992, with a major in Economics. She received an MBA from Harvard Business School in 1997.  Ms. Myers lives in New York City and Darien, CT with her husband and two children.

Watch the livestream below. You can watch all Markus’ Academy webinars on the Markus’ Academy YouTube channel.

Executive Summary

• Starting especially a few weeks ago, we started to see a rotation from growth into value. Recent stimulus packages in the US may have pushed up the inflation outlook and interest rates, leading to growth investors beginning a rotation. The economic recovery is providing a tailwind that is expected to continue into the future. However, possible headwinds include rising rates and inflation, fears of increased taxes, and supply chain disruptions. “Meme investing” will likely continue into the future, but with broader market volatility rising and people getting back to work, there may be less of this retail behavior in the future. Corporate taxes will lead to lower valuations for nearly all companies, but capital gains taxes could help companies with acquisitive business models looking to purchase small businesses. 
• The IPO market boomed in 2020, and through May 2021, it has continued to increase. Directing listings are different and are an opportunity for established  companies to simply list there shares and create a market by allowing insiders to sell.  This method eliminates the traditional investment bank-led order bookbuilding, multiday roadshows and sell-side research analyst forecasts.  Because the shares are sold by insiders at a variety of prices, the aftermarket pop could potentially be avoided, leaving insiders feeling less money left is left on the table. However, like with traditional IPOs, aftermarket performance (and thus valuation) is unpredictable. At the moment, it seems unlikely that ICOs will crowd out IPOs in the future. 
• A SPAC is a publicly listed vehicle which has 24 months to execute a merger with a private company that is public market ready. SPACs have been considered to be an expedited route to the public market. Popular during the pandemic, but not necessarily because of the pandemic; the low interest rate environment helped, yet the bigger, well-known private equity and venture capital firms viewed as good deal sourcers began to sponsor SPACs as serial issuers, which greatly grew the SPAC market. SPACs are a unique differentiated way to take a company public, typically targeting companies in growth sectors, but also across all industries. When it comes to SEC regulation, the focus should be disclosure similar to that required in a traditional IPO. 
• ESG friendly companies meet specific Environmental, Social, and Governance criteria required by the proliferation of funds specified for impact investing. Newly created ESG rating agencies have varied approaches and sometimes grade the same companies (such as Tesla) differently. ESG friendly bond issuances tend to price at tighter spreads.  Green or Social bond issuance has been the minority of proceeds raised and liquidity in these smaller tranches remains light, but demand currently far outstrips supply, implying the market should grow in the future as companies look to highlight their ESG assets and/or projects. 
• There have been a few silver linings throughout the pandemic, such as surprisingly high productivity and greater inclusivity in meetings.  Virtual roadshows provided for equal and simultaneous access to company marketing meetings for investors and minimized market risk for issuers through the elimination of travel time.  Going forward, equity capital raising could have Zoom as an integral part going forward; the bond market historically relied on fewer in person meetings because of the seasoned nature of issuers.  Virtual collaboration and networking, while less personal, has allowed more expansive mentorship opportunities and also broader content access for people early in their careers in finance.