- Global IPO volumes rose 150% and proceeds rose by 215% year-on-year
- Traditional IPOs stepped back into the spotlight while SPACs took a pause
- Q2 2021 was the best performing second quarter in 20 years
Hot IPO momentum from Q1 continued into Q2 resulting in the most active second quarter by deal numbers and proceeds in the last 20 years. While Q1 2021 was dominated by special purpose acquisition company (SPAC) IPOs, traditional IPOs stepped back into the spotlight in Q2 helped by a number of factors including ample liquidity in the financial systems and strong global equity market performance among others. Through 1H 2021 there was a total of 1,070 IPOs, raising US$222.0b in proceeds, increasing 150% and 215%, respectively, year-on-year.
The positive performance of the global IPO market indicates global economic recovery is well underway, although the pace of recovery varies across markets. While SPACs continue to be a hot topic, US SPACs have stepped out of the driver’s seat through Q2 after a high level of activity for the past 12 months. At the same time, European SPAC IPO activity grew, totalling 21 SPAC IPOs through 1H 2021.
IPO activities in the Americas continued at a fast pace through 1H 2021, with 276 IPOs raising US$93.9b. In the Asia-Pacific region, IPO activity remained steady with 471 IPOs raising US$74.3b. On the heels of a strong bull run in EMEIA equities markets, IPO activity in the region through 1H 2021 surged, resulting in 323 IPOs raising US$53.8b. EMEIA recorded the highest growth rates year-on-year among the three regions.
For the fourth consecutive quarter starting from Q3 2020, technology has led the sectors by deal number, accounting for over a quarter (27%) of all 1H deals with 284 IPOs raising US$90.2b. The health care sector followed, accounting for 17% of 1H 2021 IPOs with 187 deals raising US$33.4b, followed by industrials which saw 140 IPOs raise US$24.3b. These and other findings were published in the EY Global IPO trends report, Global IPO Trends: Q2 2021.
Paul Go, EY Global IPO Leader, says:
“Globally, IPO markets put in a strong performance in Q2 2021 as traditional IPOs continued to benefit from the momentum in the first quarter while SPACs took a pause. IPO-bound companies wanting to take advantage of favorable market sentiment and high liquidity were keen to complete their transactions before an expected mid-year slow-down. Companies considering an IPO should prepare multipronged strategies that demonstrate resilience against geopolitics, the evolving COVID-19 pandemic situation, valuations and governance challenges.”
Asia-Pacific IPO markets remain resilient
Markets in the Asia-Pacific region maintained momentum through the first half of 2021, seeing the highest proceeds for the first half of the year in more than 20 years. Overall IPO volume resulted in 471 IPOs raising US$74.3b by proceeds, a 76% and 108% respective increase year-on-year. Technology continues to lead the sectors by both volume (99 IPOs) and proceeds (US$25.1b).
Greater China continued at a positive pace through the first half of 2021 seeing 293 IPOs raise US$60.3b by proceeds. Mega IPOs played a key role in Greater China, with five of the top 10 global IPOs launched on Greater Chinese exchanges.
Despite new waves of the COVID-19 pandemic in Japan, the country saw 1H 2021 IPO numbers rise 59% to 54 deals, raising US$3.0b by proceeds. South Korea posted two mega IPOs in the first half of 2021, including the fifth largest IPO globally in Q2 2021 by proceeds, which raised US$2.0b.
In 1H 2021, Asean’s exchanges remained steady, recording a total of 54 deals raising US$5.1b, compared to 44 deals raising US$3.2b over the same period in 2020. In proceeds, Thailand’s exchanges led with 15 deals raising US$2.9b, followed by the Philippines, which saw 2 deals raising US$1.3b. Indonesia posted the largest number of IPOs with 22 deals raising US$0.5b, while exchanges in Malaysia and Singapore saw 12 deals raising US$0.1b, and 3 deals raising US$0.24b respectively.
Max Loh, EY Asean IPO Leader, says:
“Asean had a respectable IPO showing in 1H 2021, recording the best first-half result over the past few years, where we saw 44 IPOs raising US$3.2 in 2020 and 40 IPOs raising US$1.9b in 2019. In spite of the ongoing COVID-19 pandemic, which continues to ravage economies, Asean’s corporates are showing optimism and confidence in the region’s ultimate economic recovery and leveraging the capital markets for growth and emerging digital opportunities. This momentum is expected to hold steady going into the second half of 2021, led by Thailand and Indonesia. The introduction of Asean SPACs into the mix may well provide the ballast for more public listings going forward.”
Americas IPO deal volume and proceeds reached highest point in 20 years
IPO activities in the Americas region sustained strong momentum through 1H 2021, experiencing record-breaking volume resulting in 276 IPOs, raising US$93.9b by proceeds – a 229% increase by volume and 282% rise by proceeds year-on-year. Health care topped the sectors in terms of volume representing 36% of deals, followed by technology with 31%. By proceeds, those sectors flipped, with technology raising nearly half (49%) of all proceeds while health care accounted for 23%.
Q2 2021 saw a dramatic decrease in SPAC appetite, particularly in the US with only 59 SPAC IPOs raising US$12.0b. While US SPAC activity has lulled, activity is expected to remain steady over the US summer months, picking up speed in the fall. As for traditional US IPO activity, 1H 2021 deal numbers surged in June resulting in 218 IPOs, raising US$84.2b in proceeds. The US continues to produce unicorns, seeing 41 unicorn companies launching IPOs in 1H 2021 compared to 27 unicorn listings through all of 2020.
Brazil’s IPO market stayed hot through the first half of 2021 seeing 27 IPOs – nearly the same number of IPOs through all of 2020 (28). Looking ahead, despite the recent increase in interest rates, signs of economic recovery and the continued COVID-19 vaccination rollout will help maintain the high volume of transactions in the country, strengthening Brazil’s pipeline through the second half.
Rachel Gerring, EY Americas IPO Leader, says:
“Americas IPO market maintained robust activity in Q2 2021, driven by record breaking levels of technology IPOs not seen in more than two decades. Aftermarket performance has not been as strong as 2020, but the IPO pipeline is filling up, indicating a busy mid-year. We anticipate strong activity for the rest of the year supported by the high valuations in the broader market, solid performance of the IPO asset class, along with disruptive companies in traditional industries building the pipeline.”
EMEIA 1H IPO volume and proceeds increase by 325% and 430% respectively
The EMEIA region came through the first half of 2021 strong, carried by positive momentum from Q1 resulting in 323 IPOs raising US$53.8b, a 325% and 430% respective year-on-year increase. Due to the heavy involvement of exports in EMEIA, the region is highly impacted by the economic health of the Asia-Pacific and Americas markets, so as those region’s fortunes have improved, so has EMEIA’s.
As many European countries emerged from a third wave of the COVID-19 pandemic, investor sentiment surged with a positive economic outlook in tow. This resulted in 227 IPOs, a 383% increase, raising US$46.6b by proceeds, a 509% increase year-on-year.
The UK also saw volume and proceeds rise significantly, reflecting pent-up demand from the past 18 months while the country moved past UK elections, Brexit and then the COVID-19 pandemic. This resulted in 43 IPOs raising US$12.7b by proceeds, a 975% and 385% respective year-on-year bump.
Dr. Martin Steinbach, EY EMEIA IPO Leader, says:
“A spectacular bull run in equities markets in H1 2021 led to quadruple the number of IPOs and five times the proceeds year-on-year, we are beginning to see a return to normal in terms of IPO activity. This is backed by positive momentum and investor sentiment, high liquidity in the markets looking for returns and an improved economic outlook. Moreover, a merger with a SPAC is becoming an alternative path for IPO-bound companies to go public.”
2H 2021 Outlook: full speed ahead for IPO-ready companies and hungry investors
Entering the second half of 2021, the IPO market continues its forward momentum as more companies look to go public, taking advantage of favorable conditions. A steady pipeline of US$1b+ IPOs is expected through the year including tech unicorns, SPACs and companies in sectors that have already proved resilient like technology and health care despite the COVID-19 pandemic. On the flip side, 2H 2021 may prove challenging as the lingering impacts of the COVID-19 pandemic continues to affect companies in sectors most impacted by national lockdowns – such as traditional retail, travel, tourism and hospitality. If these sectors fail to recover, global markets will continue to fall short of a full global economic recovery.
Regardless of sectors, those companies looking to go public in 2H 2021 should be well-prepared with a realistic vision of valuations while making certain to have an environmental, social and governance (ESG) strategy in place that is already part of their purpose, strategy and culture.
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About the data
The data presented in the Global IPO trends: Q2 2021 report and press release is from Dealogic and EY. YTD 2021 (i.e., January-June) is based on completed IPOs from 1 January 2021 to 30 June 2021. Data as of COB 30 June UK time. All data contained in this document is sourced from Dealogic, CB Insights, Crunchbase and EY unless otherwise noted. Special purpose acquisition company (SPAC) IPOs are excluded in all data included in this report, except where indicated.