Bank watchers are stunned by Merrill Lynch's rapid rise to the top of the initial public offering (IPO) business in China this year.
In the first four months alone, Merrill won the right to handle four major China IPOs: Dongfeng Motor, Air China, Shenhua Group and China Power International.
Observers estimate the combined four deals could raise as much as US$4 billion, earning Merrill between $30 million and $50 million in fees.
Merrill's ascendancy comes after several fallow years. Last year, Merrill was not even in the top 10 for IPOs in Asia-Pacific excluding Japan. The firm's ranking fell to 12th last year from fifth in 2002, raising just US$300 million, lagging behind top players Credit Suisse First Boston (CSFB), Citigroup and CICC, according to Dealogic.
The company pitched for just one China deal last year but was unsuccessful, executives at the firm said. Merrill earned an estimated US$28.9 million in investment banking fees from China IPOs in 2002, last year and the first quarter of this year, according to estimates by Dealogic.
Rival bankers, accustomed to feeling little pressure from Merrill, are now facing a new rival.
'All of a sudden, starting from this year, they have emerged as a very powerful bank,' said a senior China banker at another firm.