A happier new year

Rarely has a year that promised deal makers so little delivered so much. At the start of 2003, a divisive U.S.-led war in Iraq was imminent, the world economy was laboring to grow, equity markets were languishing, and Asia was just beginning to confront the deadly severe acute respiratory syndrome outbreak.

As of early January 2004, by contrast, the worst fears about a protracted battle with Saddam Hussein's army have not been realized, the global economy is reviving, stock markets are thriving, and SARS, though not eradicated, has been contained.

Bankers, corporate executives and investors couldn't be happier about the turnaround. The improvement in capital market sentiment over the course of the year is reflected in Institutional Investor's 2003 Deals of the Year, beginning on page 54.

At the start of the year, the few equity issues being done were mostly for defensive purposes. In March, German insurance giant Allianz, following its first annual loss since World War II, had to ask skeptical shareholders to put up more than E4 billion to replenish its capital. Grudgingly, they went along -- in Europe's second-largest rights offering.

Contrast that with the exciting financings later in the year that aimed at fostering growth. Just as 2003 closed, state-owned China Life Insurance Co. pulled off the year's biggest IPO -- $3.47 billion in all. Investors were so enthusiastic about the company's prospects for selling insurance to the mainland's increasingly affluent citizenry that the deal was oversubscribed.

"What was striking to me was how 2003, after a miserable start, ended on such an up note," says Senior Contributing Editor Stephen Taub, who oversaw the preparation of our Deals of the Year.

That is, it ended on an up note with one discordant exception: The final blockbuster event of 2003 was Italian food behemoth Parmalat's scandalous bankruptcy. In December the company hired Mediobanca to help sort out the mess. It's a great opportunity for the storied investment bank, whose long-standing role as Italy's master deal maker has been in jeopardy ever since the death of its legendary founder, Enrico Cuccia, four years ago, to demonstrate anew its prowess. In an exclusive interview with II ("Power Player?," page 38), the bank's current head, Gabriele Galateri di Genola, promises a revitalized Mediobanca. Keeping Parmalat alive will require nothing less.