- Q3 2021 was most active third quarter by deal numbers and proceeds in 20 years
- Global IPO volumes rose 87% and proceeds rose by 99% year-on-year
- Exchanges in Asia-Pacific and Asean hold steady despite volatility
The global IPO market continued to boom through Q3 2021, resulting in the most active third quarter by deal numbers and proceeds in the last 20 years.
Q3 2021 saw 18% more deals than the previous third quarter record set in 2007, and 11% higher proceeds than the last record-setting third quarter in 2020. In Q3 2021 alone there have been 547 IPOs raising US$106.3b. Year-to-date (YTD) there have been a total of 1,635 IPOs raising US$330.7b, an 87% and 99% increase year-on-year, respectively. Overall, Q3 totals YTD have already surpassed 2020 by both deal numbers and proceeds.
A key driver of activity in the third quarter was the rebound of IPO markets in Europe, Middle East, India and Africa (EMEIA), particularly Europe, India and Tel Aviv exchanges, as well as IPO candidates racing to raise capital before expected tapering begins. With the exception of the Europe market, the special purpose acquisition company (SPAC) pause seen in Q2 has extended to Q3.
In the Americas, the traditional IPO market has continued at an accelerated pace, with 409 IPOs raising US$133.6b. In the Asia-Pacific region, while there are some signs of a market slowdown, the region continues to be active, producing 750 IPOs raising US$123.4b YTD. Meanwhile, the EMEIA region is experiencing a steady stream of activities with 476 IPOs raising US$73.7b.
From a sector perspective, technology, health care and industrials once again rose to the top of the pack retaining their firm grasp on investor attention. For the fifth consecutive quarter since Q3 2020, technology generated the highest year-to-date number of deals (419), raising the highest amount in proceeds for the sixth consecutive quarter, from Q2 2020 (US$116.4b). Health care followed with 287 IPOs raising US$49.2b by proceeds, and industrials came in third with 204 IPOs raising US$35.3b by proceeds. These and other findings were published today by EY.
Paul Go, EY Global IPO Leader, says:
“Global IPO markets continue to perform well in Q3 2021, already outperforming the entirety of 2020 by both deal numbers and proceeds. Some key drivers through this period include the triumphant rebound of EMEIA IPO markets, as well as IPO candidates moving quickly before the window closes. As we head into the last quarter and market uncertainties and volatility continue to intensify, it is important to be well prepared, consider alternatives to the traditional IPO route and be realistic on valuation to ensure success.”
Asia-Pacific holds steady despite volatility
While the Asia-Pacific region maintained steady momentum through Q3, the region may soon experience a slowdown 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.
In Q3 2021, exchanges in Asean remained steady, with 35 deals raising US$3.4b compared to 33 deals raising US$1.1b over the same period in 2020. Across the region, the Indonesia Stock Exchange was the most active, with 15 deals raising US$1.7b; followed by exchanges in Thailand (9 deals raising US$383m); Malaysia (7 deals raising US$387m); Philippines (3 deals raising US$925m); and Singapore (1 deal raising US$6m).
Max Loh, Singapore Managing Partner and EY Asean IPO Leader, says:
“In Asia-Pacific, after many quarters of robust IPO activity, there are some signs of a temporary falloff in terms of IPO numbers and proceeds raised. Some of the factors include geopolitical tensions between the US and China, the resurging COVID-19 pandemic and regulatory action across the region, which may stymie growth.
“Led by Bukalapak’s listing on the Indonesian Stock Exchange, Asean registered a steady IPO performance in Q3 2021, continuing the strong showing in 1H 2021. This reinforces the point that Asean corporates, in particular technology companies, continue to drive growth and seek capital to fund their growth aspirations. Asean exchanges are undergoing regulatory reform to attract and accommodate the listings of their homegrown companies on the domestic exchanges. With Singapore introducing guidelines for SPAC listings, together with various other funding and support initiatives to boost the listing market, this will undoubtedly attract more unicorns and technology players to list locally.”
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.
Rachel Gerring, EY Americas IPO Leader, says:
“Closing Q3, 2021 is already setting new records. To date, 2021 has already surpassed the 20-year record by both deal count and proceeds in the Americas. An accommodative market backdrop and valuations toward the upper ends of historical ranges have encouraged numerous issuers to go public. Barring substantial upsets in market backdrop and continued strong after-market performance, a slowdown in new issue activity is unlikely. Companies looking to enter public markets should focus on readiness activities now to capitalize when conditions are optimal.”
EMEIA makes a significant contribution to global activities
EMEIA is performing strongly with 476 IPOs raising US$73.7b, a substantial 263% and 313% acceleration respectively year-on-year. 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.
Dr. Martin Steinbach, EY EMEIA IPO Leader, says:
“EMEIA experienced significant growth and has increased its share of global IPO deals so far this year. There is a very healthy pipeline and, for now, IPO windows remain open. While we still have some volatility, such as the global COVID-19 pandemic, economies are coping and moving ahead. Looking to the end of the calendar year, speed will be critical for IPO candidates to get deals done. IPO candidates should prepare early, take all options into consideration, ensure they have the right internal talent and external IPO resources, and strike when the time is right.”
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.
Notes to editors
EY exists to build a better working world, helping to create long-term value for clients, people and society and build trust in the capital markets.
Enabled by data and technology, diverse EY teams in over 150 countries provide trust through assurance and help clients grow, transform and operate.
Working across assurance, consulting, law, strategy, tax and transactions, EY teams ask better questions to find new answers for the complex issues facing our world today.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. EY member firms do not practice law where prohibited by local laws. For more information about our organization, please visit ey.com.
This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.
About EY Private
As Advisors to the ambitious™, EY Private professionals possess the experience and passion to support private businesses and their owners in unlocking the full potential of their ambitions. EY Private teams offer distinct insights born from the long EY history of working with business owners and entrepreneurs. These teams support the full spectrum of private enterprises including private capital managers and investors and the portfolio businesses they fund, business owners, family businesses, family offices and entrepreneurs. Visit ey.com/private
About EY Initial Public Offering Services
Going public is a transformative milestone in an organization’s journey. As the industry-leading advisor in initial public offering (IPO) services, EY teams advise ambitious organizations around the world and helps equip them for IPO success. EY teams serve as trusted business advisors guiding companies from start to completion, strategically positioning businesses to achieve their goals over short windows of opportunity and preparing companies for their next chapter in the public eye. ey.com/ipo.
About the data
The data presented here and available on ey.com/ipo/trends is from Dealogic and EY. Year to date 2021 (i.e., January-September) is based on completed IPOs from 1 January 2021 to 21 September and expected IPOs by the end of September 2021. Data as of close of business 21 September 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.