(Reuters) – Wall Street's record high shows no signs of slowing down.
With more than six months to the end of the year, US IPOs have already reached $ 171 billion and a record $ 168 billion in 2020, according to Dealogic Ltd.
Driving the IPO is soaring corporate valuations in the stock market, inflated by the Federal Reserve's low interest rates and monetary stimulus in the wake of the COVID-19 pandemic. This has driven a wave of speculative frenzy that benefits not only traditional listed companies, but also specialized acquisition companies formed strictly to raise money through IPOs.
The IPO will reach new heights in the second half of 2021, as a number of high-profile start-ups such as China's largest ride-sharing company Didi Chuxing Technology Co. Ltd., online brokerage house Robinhood Markets Inc. and electric vehicle manufacturer Rivian Automative LLC are preparing to launch multi-billion dollar sales.
"If markets hang close to where they are right now, we'll be incredibly busy this summer and fall with IPOs," said Eddie Molloy, Morgan Stanley's co-head of equities markets in America.
“Trees do not grow to the sky forever, so you will not have record volumes every year. But given the stability, we would also expect a hectic year in 2022. ”
Excluding revenues from SPAC IPOs, traditional lists of big names, including South Korean e-commerce giant Coupang Inc., have raked in $ 67 billion this year and retain 2021
The average one-time gain for US IPOs so far this year is 40.5%, compared to 28.2% over the same period in 2020 and 21.7% in 2019, according to Dealogic. The average return on a week in 2021 is 35.7%, higher than 32.2% in 2020 and 25.5% in 2019.
Capital market banks and lawyers estimate that companies can end up close to $ 50 billion through traditional IPOs, excluding SPAC, before the end of the September quarter. Revenue from the IPO touched $ 24.1 billion in the second quarter through June 15, according to Dealogic.
Didi's bid alone could raise close to $ 10 billion, sources have previously told Reuters.
By the end of the year, US IPOs could raise $ 250 billion to $ 300 billion or more – a staggering amount that was once considered unthinkable, according to investment banks.
"Five hundred million used to be a pretty big IPO. Nowadays, everything seems to be in the billions or three quarters of a billion plus. So there has really been an explosion in the size of transactions as well," says Jeff Bunzel, global co-CEO of the share capital markets at Deutsche Bank.
"And there seems to be a sufficient amount of capital out there to support that level of activity."
SPAC's fuel boom
The record number has been largely driven by the boom in specialty listing companies.  SPACs, or blank check companies, are listed shell companies that raise money for the sole purpose of merging with a private company within two years of listing.The process takes the private company public.
In the first quarter alone, SPAC lists increased close to 100 billion, well over $ 83 billion for the whole of 2020, according to SPAC Research data.
Despite the recent slowdown in SPAC business, 339 SPACs have been formed this year, raising about $ 105 billion, or nearly two-thirds of the IPO volumes accounted for less than half of the total IPO volumes by 2020.
“Values are strong, fund flows are strong and all are included. The audiences you need to have an active and successful IPO market remain intact right now, ”said Mr Bunzel.
Investment bankers and lawyers also pointed out that the capital market boom is attracting more companies that would otherwise have been private for longer, making the IPO pipeline even more robust in the foreseeable future.
"Because of the increase in SPAC transactions, many companies feel that this is an appropriate time to meet the market and achieve attractive values. I believe that this has led to private companies being more receptive and interested in pursuing a public alternative. , says Paul Tropp, Head of the Capital Markets Group at Ropes & Gray.
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