Americas IPO activity maintains hot streak
IPO activities in the Americas are not slowing down. 2021 continues to beat the most active 20-year record by deal numbers and proceeds. YTD, the Americas has seen 409 IPOs raise US$133.6b by proceeds, a 118% and 113% respective increase year-on-year. The health care sector saw the most deals with 143 IPOs raising $29.0b, and technology saw the highest proceeds raised (US$60.2b) by 122 IPOs.
While SPAC activity in the US remains elevated, it is not quite at the same breakneck speed seen at the end of 2020 and in Q1 of this year. Transactions continue to be announced daily, but the SPAC market is facing some headwinds: an oversupply of SPACs has created bidding wars, tepid trading performance, lower trading liquidity and the private investments in public equity (PIPE) market has softened while facing increased regulatory and congressional scrutiny. The SPAC market will continue to be an attractive option for the public market, though closing deals may become harder for SPAC sponsors.
The US continues to see strong growth YTD with 323 IPOs, a 117% increase year-on-year, which raised US$117.3b by proceeds – up 110% year-on-year. Meanwhile, Brazil’s B3 exchange also performed strongly, with 44 IPOs raising US$11.4b, a 144% and 157% respective increase year-on-year.
Asia-Pacific holds steady despite volatility
While the Asia-Pacific region maintained steady momentum through Q3, the region may soon experience a slow down due to geopolitical tensions and ongoing volatility that is expected to continue. YTD, the region has recorded 750 IPOs, an increase of 35% year-on-year, which raised US$123.4b by proceeds – a 44% year-on-year bump. Technology is the most active sector in the region by both deal numbers (154 IPOs) and proceeds (US$34.3b).
Greater China continued to see gains YTD, with 444 IPOs raising US$94.1b by proceeds, a 13% and 20% respective increase. While activity continues to increase, the market experienced a complete halt of cross-border IPOs from China into the US market during this quarter, impacting both the Asia-Pacific region and the Americas.
Japan experienced a 50% increase in IPOs (81) and a 195% increase by proceeds (US$4.0b) through the third quarter. This acceleration is owed to high liquidity, strong local stock market performance and improving sentiment in part due to the successful hosting of the 2020 Tokyo Olympics, despite a lack of stimulus funds from the government and the economic impact of the COVID-19 pandemic.
EMEIA makes a significant contribution to global activities
The significant growth in the region compared to Asia-Pacific and the Americas shows that the EMEIA markets are not immediately reactive to activity experienced by the rest of the world. When it comes to the sectors in the region, technology far outpaced the rest with 143 IPOs raising US$21.9b by proceeds.
The UK is experiencing a swell with 66 IPOs (a 633% increase) raising US$15.9b by proceeds which increased 124% year-on-year. India is also seeing great momentum with 72 IPOs raising US$9.7b, reflecting a 200% and 331% respective increase. The Middle East and North Africa (MENA) regions, in particular, the Tel Aviv Stock Exchange, also saw notable gains with 88 IPOs raising US$5.3b, an increase of 340% by deals and 242% increase by proceeds.
Q4 2021 outlook: strike while the market remains favorable
As we near the end of 2021, a few uncertainties lie ahead that could increase market volatility and challenges for a successful IPO. In the meantime, while we expect a steady pipeline of deals to continue, companies should be looking to make the most of the favorable market conditions and go public. However, a host of uncertainties remain: geopolitical tensions, regulatory changes in flux, inflation risks and tapering by the US Federal Reserve. At the same time, new variants of COVID-19 are disrupting a full global economic recovery, and a majority of the sectors are affected.
Serious IPO candidates should look to prepare themselves as early as possible and be ready to launch quickly, if needed. While preparing, they should be realistic about the right path for the company and consider alternatives as needed. Finally, as organizations review their strategic priorities, environmental, social and governance (ESG) goals must be addressed as investors now consider these to be imperative.