Despite the uncertainty of 2020, initial public offerings (IPOs) set records last year. The world saw the highest IPO capital raising activity in a decade, with $331 billion raised across 1,591 listings – a 42% increase compared to 2019, according to Baker McKenzie’s IPO Report 2020.
Across all IPOs, Financials grew by 37% in volume compared to 2019, raising $108 billion in 2020, across 360 listings. Technology companies raised $55 billion across 257 listings. Industrials saw the biggest growth year in terms of capital raising, increasing over 120% to raise $24 billion in 2020.
Healthcare companies raised $33 billion in 2020 across 162 listings.
The US and China dominated the list of top exchanges with the NYSE coming in first place by value at $79 billion followed by NASDAQ, the Hong Kong exchanges (HKEx and HK GEM), the Shanghai Stock Exchange, and Shenzhen Stock Exchange rounding out the top 5, the report said.
The Regional Perspective
In the US, domestic activity accounted for $130 billion of capital raised across 411 listings, which makes for a 118% increase in capital raised from 2019. North America cross-border activity grew 28% in volume versus 2019, and raised $25 billion, a 120% increase from 2019. Canada also saw big gains in 2020 with a total of 71 offerings for a total of nearly $3 billion.
Asia Pacific raised $139 billion across 937 listings; a 39% increase in capital raised from 2019. The bulk of this activity ($91 billion) was raised through 811 domestic listings, representing a 33% increase in capital raised through domestic activity.
IPO activity was down across the board in Europe, Middle East and Africa (EMEA). Domestic listings fell to 112, a 7% drop from 2019, raising $22 billion. Despite a significant increase in capital raised in cross-border IPOs, the totals for EMEA were just $29 billion raised across 128 listings. This represents a 51% drop in capital raised and 2% drop in volume from 2019.
However, this level of activity does not extend to the broader equity markets where Europe, and London in particular, have seen an explosion of secondary offerings. Secondaries on the London Stock Exchange alone have raised USD 44 billion year-to-date, up 60% on last year and almost half of which was generated in Q2, largely from UK issuers.
Latin America raised $9 billion in 2020, which is an increase of 159% in capital raised versus 2019. With 29 listings in 2020, the region recorded a 314% growth in volume of activity.
Growth in Brazil’s IPO activity was the strongest in the region. With 26 IPOs in 2020, raising $8 billion, this is the first time Brazil saw its number of IPOs reach the double digits since 2017 and its largest number since 2007.
Global IPO Boom rolls on in 2021
The strong IPO market has continued into 2021 with 875 initial public offerings each raising at least $1 million so far, data from Dealogic showed. Companies and Special Purpose Acquisition Companies (SPACs)have raised $230bn this year, well above the previous peak of $80bn set in the year of the dotcom boom in 2000.
A SPAC sometimes known as a “blank check” company, is a shell company that gets listed on a stock exchange first with the intention within a specific time frame (usually 1-2 years but can be up to 3 years) to acquire a private company and help it list on a stock exchange.
The rise in IPOs stems largely from a spree of flotations of SPACs which have grabbed the investment spotlight and remain among the most active investment classes in the market, accounting for almost half of the fundraising haul through IPOs in 2021.
But the boom in IPOs also reflects investor enthusiasm amid rock-bottom levels of interest rates and economic stimulus, which have all contributed to keeping public markets frothy.
Among the big debuts already this year have been Kuaishou, one of China’s leading social media firms which raised $6.2bn in its Hong Kong listing in February. The Tencent-backed company, sold shares at the top of its price range in a deal that ranks as the world’s biggest internet IPO since Uber Technologies’ $8.1 billion US share sale in May 2019.
Last month, Coupang, the leading B2C e-commerce platform in South Korea, made its market debut on the New York Stock Exchange through an IPO and raised $4.6bn. Coupang’s IPO was the biggest by any Asia-based company in New York since Alibaba’s $25bn listing in 2014, the biggest ever in the US.
Experts believe the rest of the year looks promising for a spate of new listings as the world economic reopening after the Covid-19 crisis is likely to prompt companies to pursue flotations.