- Q1 2021 global IPO volumes rose 85% and proceeds rose 271% year-on-year
- Special purpose acquisition company IPOs were more active in Q1 2021 than through all of 2020
- Q1 2021 was the best performing first quarter in 20 years
Extraordinary IPO activity in the new year resulted in the best-performing first quarter by deal numbers and proceeds in the last 20 years. While Q1 is traditionally a slow quarter, this heightened activity bucks that trend. Just as traditional IPO markets have been highly active, the special purpose acquisition company (SPAC) IPOs in Q1 have been breaking records as well, completing more deals and raising more in proceeds than in the entirety of 2020. Through Q1 2021, the global IPO market saw 430 deals raising US$105.6b in proceeds, increasing 85% and 271% year-on-year, respectively.
This continued surge in momentum can be attributed to ample liquidity and new opportunities propelled by the COVID-19 pandemic. At the same time, speculative and opportunistic transactions along with the popularization of retail investing platforms among the general public, including younger generations, have made investing more accessible than ever. Looking ahead, with fears of a market correction on the horizon, investor sentiment remains fragile. With this in mind, investors will continue to look for investment returns taking advantage of liquidity while it is still available.
The technology sector remained at the top spot by deal numbers through the first quarter dominating in terms of number of IPOs (111) and proceeds (US$46.1b). Health care followed technology with 78 IPOs raising US$14b. Industrials came in third by IPO numbers seeing 57 deals raise US$6.3b in proceeds. These and other findings were published today in the EY quarterly report, EY Global IPO Trends: Q1 2021.
EMEIA’s IPO market sees increased momentum, optimism and unicorns through Q1
The EMEIA region got off to a strong start in Q1 2021 buoyed by the lingering momentum from Q4 2020. Sustained activity in the region can be attributed to high valuations, low volatility and rising confidence in an eventual economic rebound. Overall EMEIA saw 109 IPOs, a 179% increase YOY. These deals raised US$26.1b in proceeds, a 646% increase YOY.
Europe stayed resilient despite restrictions brought on by the COVID-19 pandemic resulting in improved investor sentiment. European IPO activity rebounded in Q1 increasing deal numbers by 315% (83) and proceeds by 1,814% (US$23.1b). In the UK, investors sustained their appetites and companies took advantage of pandemic-accelerated growth and high levels of liquidity. The UK ended the quarter with 17 IPOs raising US$7.5b in proceeds, increasing 467% and 1,031%, respectively.
Americas IPO markets break records by deal numbers and proceeds in Q1 2021
IPO activity in the Americas region more than tripled by deal numbers compared to Q1 2020 with deals increasing 218% (121 IPOs) and proceeds raising an unprecedented 446% more totaling US$45.2b. While the health care sector continued to lead the region by deal numbers through Q1, with 44 IPOs (raising US$8.7b), the technology sector accounted for the lion’s share of the region’s proceeds raising US$21.4b (via 33 IPOs).
Asia-Pacific IPO markets defied expectations, maintaining positive momentum
The Asia-Pacific region started the year by accounting for nearly half (47%) of the global IPO activities in Q1 2021. The region saw 200 IPOs raising US$34.3b in proceeds, achieving the highest Q1 proceeds in 20 years, beating the former record from Q1 2010. In terms of sector activity, technology outpaced all others by both IPOs (51) and proceeds (US$17.7b).
Q2 2021 outlook: uncertainties may saturate market volatility triggering a perfect storm
The global IPO market started the year 2021 on high, breaking records. However, while sentiments are trending positive, uncertainties will continue to weigh, creating market volatility. New waves of the COVID-19 pandemic around the world combined with differing global vaccination progress, geopolitical tensions, inflation, interest rates and the ability of the global financial systems to withstand unexpected market shocks are all potential ingredients for a perfect storm.
Stelios Demetriou, Partner and Head of Strategy and Transactions Services at EY Cyprus, commented: “We have just witnessed, in the first quarter of 2021, the best performance of IPO markets in 20 years, backed by strong liquidity and high valuations. However, slower-than-expected vaccination programs and new waves of the pandemic may threaten economic recovery. Combined with other sources of uncertainty, such as the trade talks between China and the US under a newly elected president, inflation, interest rates and the resilience of the banking sector, this may mean that the window of opportunity may close sooner than expected. Therefore, companies planning an IPO need to prepare early and keep all options open.”