- Q1 2021 global IPO volumes rose 85% and proceeds rose 271% year-on-year
- Asia-Pacific IPO markets defied expectations, maintaining positive momentum
- Special purpose acquisition company IPOs were more active in Q1 2021 than through all of 2020
Attractive market conditions in 2021 so far have 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 also been breaking records, completing more deals and raising more in proceeds than in the whole of 2020. Through Q1 2021, the global IPO market saw 430 deals raising US$105.6b in proceeds, increasing by 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 Americas region continued its streak of resilience into the first quarter with 121 deals raising US$45.2b in proceeds. Overall, Americas exchanges saw the highest combined deal numbers and proceeds in more than 20 years. The Asia-Pacific region recorded the highest IPO proceeds in 20 years seeing 200 IPOs raising US$34.3b in proceeds. Following a quiet 2020, IPO markets in EMEIA roared to life in Q1 2021 resulting in 109 IPOs and US$26.1b in proceeds.
The technology sector remained as 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 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, Global IPO Trends: Q1 2021.
Paul Go, EY Global IPO Leader, says:
“With markets awash with liquidity, global IPO deal numbers and proceeds have posted the best performance witnessed in 20 years. However, many uncertainties remain that can create volatility and affect the IPO markets. These include slower-than-expected vaccination programs and new waves of the pandemic that can continue to peg back any real economic recovery; the slow-down and withdrawal of IPO applications due to tightened regulatory process; and risk of capital markets destabilizing from banks scaling back on leverage. Companies need to be well prepared to access the market when the window remains open.”
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 volume (51) and proceeds (US$17.7b).
Greater China’s positive economic growth was reflected in its buoyant IPO momentum. Despite a new review process instituted by Chinese regulators, Greater China saw a 51% increase in deals (133) and 121% increase by proceeds (US$28.9b) YOY.
Japan’s IPO activity remained steady as well, as funds continued to find their way to high-tech startups resulting in a healthy pipeline of IPO candidates. Overall Japan saw 20 IPOs raise US$1.0b in proceeds.
In Asean, there were a total of 23 IPOs raising US$2.4b, down from 32 listings raising US$3b over the same period last year. In proceeds, Thailand’s exchanges raised US$1.6b from 5 IPOs. In deal numbers, Indonesia led with 12 IPOs, followed by Malaysia (4 IPOs). Philippines and Singapore each saw 1 IPO listed in Q1 2021.
Max Loh, EY Asean IPO Leader, says:
“The first quarter is a typically muted period for IPOs in Asean, as companies gear up for capital market activities. Cautious optimism prevails with existing uncertainties, providing a cocktail of volatility in the Asia-Pacific IPO markets. Companies will need to be resilient to challenges and prepare early to be successful in their IPO aspirations.”
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 with 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).
As with the global market, the US tends to be slower in Q1. However, Q1 2021 saw deals being carried over from 2020 and issuers taking advantage of high valuations led by technology companies resulting in the US seeing 99 IPOs raising US$41.1b overall. The explosion of SPAC IPO activity continued into Q1 2021 with activity already surpassing the records broken in 2020. In Q1 2021, there were already three times as many SPAC IPOs on US exchanges than traditional IPOs, all while traditional IPO deal numbers skyrocketed as well. Through Q1 2021, the US saw 300 SPAC IPOs raise US$93.4b in proceeds.
Like the US, Brazil’s IPO activity continues to surge culminating in the country’s most active quarter since 2007. In Q1 2021, Brazil represented 12% of the region’s total IPO count with 15 IPOs raising US$3.5b.
Rachel Gerring, EY Americas IPO Leader, says:
“Americas IPO activity maintained its resiliency into 2021, driven by high valuations and strong aftermarket performances. Despite the volume of SPACs and the attention they are receiving, traditional IPOs have staying power with Q1 2021 deal numbers and proceeds being the highest in more than 20 years. Continued innovation in the traditional IPO product is allowing a healthy competition with non-traditional approaches to public markets. Ongoing evolution provides issuers more optionality and the ability to form a curated path to public markets.”
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.
Dr. Martin Steinbach, EY EMEIA IPO Leader, says:
“High valuations, low volatility and increasing optimism of an economic rebound have sustained IPO activity in Q1 2021 and motivated several unicorns to leap through the open transaction window. We expect this momentum will carry into Q2 2021. With tailwind from government stimulus and a successful rollout of vaccines across the region, there is growing confidence in a global economic rebound in 2021 and 2022. However, a third wave of the COVID-19 pandemic and a possible market correction may influence IPO windows for the remainder of the year. IPO candidates need to prepare early and keep all options open.”
Q2 2021 outlook: uncertainties may saturate market volatility triggering a perfect storm
While sentiments are trending positive, uncertainties will continue to weigh, creating market volatility. The likelihood of 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. Whether a company decides to take the route of a traditional IPO, SPAC merger or a direct listing, well-prepared companies in popular sectors and with the right stories should move now to catch the transaction window while it’s still open.
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About the data
The data presented in the Global IPO trends: Q1 2021 report and press release is from Dealogic and EY. Q1 2021 (i.e., January-March) is based on completed IPOs as of 24 March 2021 and expected IPOs by end of March 2021. Data as of 25 March 2021, 9 a.m. 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.