July 26, 2021

Record-Setting IPO Activity: Turning My Frown Upside Down!

Robinhood – the app that set retail stock trading on fire – is itself going public this week. Here’s the Form S-1, which says that the company plans to sell up to one-third of its IPO shares directly through its app. The deal is getting a lot of press – and this Nasdaq article says it’s just one of 17 IPOs on the ticket for this week. This week’s activity isn’t unusual, either. Including SPAC shells, there were 1,070 IPOs during the first half of this year. 1,070!

With the IPO market remaining hot for about a year now – and, as John blogged last week, the SPAC assembly line cranking back up – is it safe to say that the decades-long trend of declining public companies is reversing? As of the end of last year, the number of public companies had already climbed modestly – and this EY memo elaborates on encouraging stats from the first half of 2021:

– The first half of 2021 (1H 2021) saw 1,070 IPOs with total proceeds of US$222b. Globally, deal numbers increased 150% year-on-year (YOY), while proceeds rose by 215%. Strong performance between January and April plus June, pushed 1H IPO deal numbers and proceeds to their highest levels in 20 years. 1H 2021 deal numbers were 18% higher and proceeds were 71% higher compared with the former record of 1H 2007 (908 IPOs, raising US$129.8b).

– Equity markets, buoyant from positive corporate results and growth forecasts on gradual economic recovery, and market liquidity have hit new heights and provided favorable conditions for the IPO mark.

– Q2 2021 IPO deal numbers and proceeds were 597 IPOs and US$111.6b, respectively. Q2 2021 was the most active second quarter by deal numbers and proceeds in the last 20 years, and beat previous records in Q2 2007 (522 IPOs raising US$87.7b).

– Q2 2021 was 206% and 166% higher, respectively, by deal numbers and proceeds compared with Q2 2020.

– A healthy pipeline of unicorns, which are set to make their way to public markets in 2H 2021, should help to ensure a busy Q3 when the traditional holiday periods will still be affected by the travel restrictions in many countries. And despite the slowdown in SPAC IPOs in Q2 2021, companies can now realistically assess the different ways of coming to the capital market, adding SPAC mergers and direct listings into their traditional IPO considerations.

The memo says plenty of industries are “winners” in this frothy market – tech, healthcare & industrials, materials, companies that benefit from lockdowns…and also those expecting a payday when things open back up. The jury is out on whether it’s a bubble, but it’s worth enjoying the moment.

If you’re newly public – or advising IPO companies – don’t miss our August 25th webcast, “Newly Public: Building Reporting & Governance Functions.” Hear David Bell of Fenwick, Jared Brandman of National Vision, Courtney Kamlet of Vontier and Trâm Phi of DocuSign discuss lessons learned from their experience successfully managing the process of going through the IPO and creating processes from scratch.

Liz Dunshee