EY Report: 2021 was the busiest year for the IPO market in the past 20 years
Faced with the uncertain environment promised in 2021, the global IPO market had an exceptional year, breaking records in IPO volume and growing steadily in the fourth quarter. In the last quarter, the winds turned with the appearance of the omicron COVID-19 variant, lingering geopolitical tensions and heightened market volatility. Overall, 2021 saw a total of 2,388 transactions generating proceeds of US $ 453.3 billion, an increase of 64% and 67%, respectively, year-on-year.
These and other findings were published today in EY’s 2021 Global IPO Trends Report.
2021 began with the rollout of the COVID-19 vaccine, a rebound in global economies and abundant liquidity in the market accelerated by government stimulus programs, which has sparked optimism for global IPO markets. The fourth quarter of 2021 was the most active fourth quarter in terms of number of transactions since the fourth quarter of 2007, with an increase of 16% (621) and 9% (US $ 112.2 billion) respectively in the total number. IPOs and product, compared to the fourth quarter of 2020.
All global markets saw overall increases in both IPO volume and proceeds, but the stock exchanges in Europe, Middle East, India and Africa (EMEIA) recorded the most growth. high, with a 158% increase in the number of IPOs (724) and a 214% increase in proceeds ($ 109.4 billion). The Americas also remained warm, ending the year with 528 IPOs, raising US $ 174.6 billion, an increase of 87% and 78% respectively. The Asia-Pacific region experienced relatively modest growth, resulting in 1,136 IPOs (28% increase) and raising US $ 169.3 billion per proceeds (22% increase).
“In 2021, the stock markets generated strong returns and investment activity as the Bucharest Stock Exchange remained resilient in the face of an uncertain environment driven by covid and political factors. As of December 17e, the total market capitalization on the main segment of the Bucharest Sock Exchange reached 44 billion euros, while the gross YTD returns of the BET index exceeded 27.0%.
2021 marked a banner year for stock and bond listings. Corporate bonds took the lion’s share of quotations this year with a total of 29 new issues for a total amount of € 932.5 million. BCR and Raiffeisen Bank were the biggest issues (425.5 million euros and 326.6 million euros respectively), followed by Autonom with 48 million euros, Agricover Holding and Libra Internet Bank with 40 million euros each.
The year was marked by 23 IPOs including three IPOs on the main market for a total value of 185.2 million euros: Transport Trade Services (TTS) for 58.5 million euros, One United Properties (ONE) for 52.6 million euros and Aquila Part Prod Com (AQ) for 74.1 million euros. Interest in introductions in the alternative segment, AeRO, was also high with 20 new launches totaling 48.6 million euros with technology, consumer products and retail the main lines of business. initial public offering ”, added Andrei Eftimie, Associate Partner, Debt Strategy & Transaction Advisory, EY Romania.
Globally, the tech sector recorded the highest number of IPOs (611) for the sixth consecutive quarter (since the third quarter of 2020) and raised the highest revenue (147.5 billion U.S. dollars) for the seventh consecutive quarter (since the second quarter of 2020). Healthcare lifted the second highest number of IPOs in volume and revenue, as 376 IPOs raised $ 65.4 billion. The industry followed healthcare closely, with 310 IPOs and US $ 63.1 billion in revenue.
EMEIA IPO markets experienced the strongest year-over-year growth
The EMEIA has seen a wave of ups and downs throughout this year. Thanks to a positive environment for entrepreneurs offering high returns and low risk, EMEIA trading performed extremely well, resulting in the highest growth rate among the three regions with a 158% increase in IPOs (724 trades ) and a 214% increase in revenues ($ 109.4 b). Continuing waves of COVID-19 infections in the region and a disrupted supply chain could pose risks as the first quarter of 2022 approaches.
Europe posted gains with 485 IPOs (154% increase), raising US $ 81.1 billion in proceeds (95% increase). The Middle East and North Africa (MENA) also saw significant increases with transaction and revenue numbers up 205% and 281% respectively (113 IPOs, $ 11.0 billion). As economies in these regions rebound, oil prices remain favorable and companies with strong fundamentals continue to garner strong investor interest. In India, IPO activity in 2021 increased by 156% in number of transactions and 314% in terms of YOY product (110 IPOs, US $ 16.9 billion). Activity in the UK also remained strong, with a 223% increase in transactions (97 IPOs) and an 81% increase in revenue (US $ 21.2 billion).
Optimism, Liquidity and COVID-19 Vaccines Drive Record Year for the Americas
The Americas experienced a bullish year, supported by low interest rates, high liquidity, vibrant stock markets, improved consumer confidence and general optimism driven by the rollout of the COVID-19 vaccine in some countries. Overall, the region saw 528 IPOs raise US $ 174.6 billion, an increase of 87% and 78% respectively. Healthcare remained the region’s top sector in terms of volume with 172 IPOs raising US $ 32.2 billion, however, technology was the top performer in terms of products with 152 IPOs raising 72 , 2 billion US dollars. As the New Year approaches, as the markets in the Americas continue to evolve and test the traditional IPO model, the structure and format of IPOs is expected to continue to evolve, helping issuers to better achieve their objectives by pursuing a public listing.
The US IPO market remains hot, with 2021 globally on track to be the most active in the 21-year history of this report, with 416 IPOs raising US $ 155.7 billion in proceeds, which represents an increase of 86% and 81% year-on-year. US Special Purpose Acquisition Company (SPAC) IPOs rose to prominence in 2021, with US exchanges registering more PSPCs than traditional IPOs. The PSPCs have shown remarkable resilience and the United States will likely continue to dominate the PSPC space.
Asia-Pacific posts modest gains in 2021
IPO activity in the Asia-Pacific region maintained a strong pace through 2021 with the number of transactions (1,136) and proceeds (US $ 169.3 billion) up 28% and 22% respectively year-on-year. While these gains are impressive, they are modest compared to the record IPO activity the Americas and EMEIA have experienced this year. When it comes to industries, technology recorded the most transactions (257) and raised the most revenue ($ 45.4 billion) during the year.
Greater China experienced a slowdown after the third quarter of 2021, in part due to mainland China’s more stringent cybersecurity review requirements for cross-border IPO-related companies that meet certain criteria. This, combined with US SEC guidelines requiring foreign issuers in the United States to comply with SEC and Public Company Accounting Oversight Board (PCOAB) inspection rules, dampened sentiment and led to the postponement or modification of several Chinese mega-IPOs. Overall, Greater China saw an 11% increase in IPOs (593) and a 3% increase in proceeds (US $ 122.8 billion).
Japan generated the most IPOs launched in a single year since 2006, with 128 IPOs raising US $ 6.8 billion in 2021 – an increase of 38% and 104%, respectively, year-on-year.
Q1 2022 outlook: prepare for headwinds but capitalize on high valuations for now
Heading into the New Year, headwinds and tailwinds are in sight, which will likely impact IPO activity. A combination of geopolitical tensions, inflation risks, and new waves and variants of the ongoing COVID-19 pandemic that are hampering full economic recovery are all at play. Despite all of this, relatively high valuations and market liquidity currently maintain the IPO window open in 2022. IPO applicants can expect higher market volatility and therefore should remain flexible with a Plan B in place to meet the needs funding in the event that the IPO timeline is delayed.