Until now, senior equity capital markets bankers have been largely spared annihilation. But with IPOs unlikely to recover any time soon, ECM teams are moving dangerously close to the killing zone.

According to research firm Dealogic, withdrawn IPOs hit a record high of $13.1bn globally last month. Nor did preceding months provide much cheer – figures from Thomson Reuters suggest Europe is in the midst of the biggest IPO drought for 15 years, with volatility making it all but impossible to bring anything to market.

Despite this, headhunters say ECM teams remain largely intact at senior levels. “We haven’t really seen redundancies in ECM yet,” says Jonathan Baines, chairman of search firm Whitehead Mann.

Rivals echo the sentiment. “ECM people have been hanging on and hoping business will improve,” says Jonathan Evans, chairman of Sammons Associates. “We haven’t seen many good senior ECM people on the street,” confirms Bob Condal, consultant at search firm Redgrave Partners. “The focus has instead been on reallocating them to different sector teams or internationally.”

Long pipeline, fat chance of realising it

Cheerleaders for the IPO pipeline haven’t disappeared entirely. Adam Hart, corporate finance managing director of small and midcap investment bank Fairfax, told the FT there are “waves and waves” of interesting companies that might normally come to market, but can’t until things improve.

Impartial observers say improvement is unlikely in the near term. “There’s not much chance the IPO market will pick up in 2009,” says James Sproule, head of capital markets research at Accenture. “Any downturn means companies will revisit their expansion plans and look hard at the cost of raising capital.”

This being the case, culling looks inevitable. “ECM is one of the areas where there will be mass redundancies,” predicts Evans.