- Initial public offerings in the US this year have already broken 2020’s record with six months still go in the year.
- Sky-high valuations in the stock market thanks to stimulus packages and the Federal Reserve’s low interest rate policies are driving the boom.
- By the end of 2021, US IPOs could potentially raise a staggering $250 billion-$300 billion.
- Sign up here for our daily newsletter, 10 Things Before the Opening Bell.
Initial public offerings in the US this year have already broken 2020’s record with six months to go.
In the first half of this year alone, IPOs have raised $171 billion, surpassing last year’s record $168 billion, according to Reuters, citing data from Dealogic.
The average one-day gain for IPOs this year is 40.5% versus the 28.2% during the same period in 2020 and 21.7% in 2019, the report said.
Furthermore, the average one-week return this year is 35.7%, an increase from 2020’s 32.2% and 2019’s 25.5%.
This doesn’t come as a surprise with this year’s blockbuster IPO including South Korean e-commerce firm Coupang, which has raked in $67 billion, cybersecurity firm Darktrace, and cryptocurrency exchange Coinbase Global.
Among the many factors driving the surge in companies going public, from traditional IPOs to SPACs, is the heady valuation of the stock market due in large part to the flush of stimulus packages passed during the pandemic and the Federal Reserve’s low interest rate policies.
“Five-hundred million used to be a pretty big IPO,” Jeff Bunzel, global co-head of equity capital markets at Deutsche Bank told Reuters. “Nowadays everything seems to be in the billions or three-quarters of a billion-plus. So there’s really been an explosion in the size of transactions as well.”
By the end of 2021, US IPOs could potentially raise a staggering $250 billion-$300 billion or more, data from Dealogic showed.
Meanwhile, SPACs, a popular route to public markets used by many startups, have boomed as well.
In 2020, a total of 248 SPACs raised $83.3 billion according to SPAC Analytics. But 2021 data already shows 340 SPACs have raised $106 billion just six months into the year.