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The Global IPO Market Had Its Strongest Second Quarter in 20 Years, Report Says

  • Throughout the first half of 2021, 1,070 IPOs raised a total of $222 billion in proceeds, respective annual increases of 150% and 215%.
  • It said the Europe, Middle East, India and Africa region was the fastest growing in terms of IPO activity year on year, fueled by a strong bull run in equity markets.

Global IPO activity had its hottest second quarter in two decades by volumes and proceeds, and momentum will continue for the rest of the year, according to a new report from EY.

Amid strong global stock market momentum and ample liquidity, traditional IPOs came back to the fore in the second quarter after the first was dominated by SPACs, the British professional services giant found.

In the first half of 2021, EY counted 1,070 IPOs that raised $222 billion in proceeds, respective annual increases of 150% and 215%.

"IPO-bound companies wanting to take advantage of favorable market sentiment and high liquidity were keen to complete their transactions before an expected mid-year slow-down," Paul Go, global IPO leader at EY, said in the report.

"Companies considering an IPO should prepare multi-pronged strategies that demonstrate resilience against geopolitics, the evolving COVID-19 pandemic situation, valuations and governance challenges."

SPACs have been a hot topic over the past year, but U.S. SPAC IPO activity tailed off in the second quarter as Europe took the reins, with 21 SPAC IPOs through the first half of the year.

There were 276 IPOs across the Americas in the first half, raising $93.9 billion, while Asia-Pacific saw 471 IPOs for total proceeds of $74.3 billion.

The EMEIA (Europe, the Middle East, India and Africa) region was the fastest growing in terms of IPO activity year on year, fueled by a strong bull run in equity markets. There were 323 IPOs in EMEIA through the first half, raising $53.8 billion.

"A spectacular bull run in equities markets in H1 2021 led to quadruple the number of IPOs and five times the proceeds year on year, we are beginning to see a return to normal in terms of IPO activity," said EY EMEIA IPO leader Martin Steinbach.

"This is backed by positive momentum and investor sentiment, high liquidity in the markets looking for returns and an improved economic outlook. Moreover, a merger with a SPAC is becoming an alternative path for IPO-bound companies to go public."

The U.K. also saw a sharp rise in volumes and proceeds due to pent-up demand from the past 18 months as the country navigated elections, Brexit and the Covid-19 pandemic, EY analysts said. This resulted in 43 IPOs raising $12.7 billion, 975% and 385% respective year-on-year jumps.

IPO market outlook

Tech accounted for 27% of all global IPOs in the first half of the year and marked a fourth successive quarter in which the sector has amassed the highest number of listings, with 284 deals raising $90.2 billion. Health care notched 187 deals raising $33.4 billion and industrials saw 140 IPOs raise $24.3 billion.

EY analysts expect the IPO market to maintain its strong momentum in the second half amid favorable market conditions but said there are still lingering uncertainties.

"A steady pipeline of $1 billion + IPOs is expected through the year including tech unicorns, SPACs and companies in sectors that have already proved resilient like technology and health care despite the COVID-19 pandemic," the report said.

"On the flip side, 2H 2021 may prove challenging as the lingering impacts of the Covid-19 pandemic continues to affect companies in sectors most impacted by national lockdowns – such as traditional retail, travel, tourism and hospitality. If these sectors fail to recover, global markets will continue to fall short of a full global economic recovery."

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