Global IPOs break previous record and surpass $ 600 billion

Global initial public offerings (IPOs) shattered their previous record this year, propelled by a boom in blank checks and companies profiting from high valuations. As of six weeks from the end, about 2,850 Special Purpose Acquisition Firms and Companies (SPACs) have raised more than $ 600 billion in IPOs, leaving records for the number of transactions and proceeds reached in 2007 in dust, according to data compiled by Bloomberg.

Leading the pack is electric truck startup Rivian Automotive, which raised nearly $ 12 billion in New York City this month. The largest in Asia was the 54 billion yuan ($ 8.4 billion) IPO of China Telecom in August, while Polish parcel locker provider InPost SA took first place in Europe. with its Amsterdam listing of 2.8 billion euros ($ 3.2 billion) in January.

These companies profited from record stock prices as central bank support provided investors with liquidity. And the economic recovery from the pandemic as well as the stimulus measures have helped boost corporate profits.

However, it was not all smooth sailing. The regulatory review dampened the enthusiasm for PSPC, which peaked earlier this year. China’s crackdown on tech companies over the summer sent shock waves through global markets, ending the record rush of Chinese listings in the United States and casting a shadow over the IPO market of Hong Kong.

“We are moving from a perfect market for IPOs with lots of liquidity and performing trades to a more normal environment,” where investors are more selective, said Gareth McCartney, Global Co-Head of Equity Markets at UBS Group.

Dizzying heights

A retail buying frenzy that sent the stock markets on a roller coaster this year, along with investor appetites for hot sectors fueled sky-high post-listing pops. Rivian, which has yet to generate revenue, has more than doubled in its early sessions, briefly outperforming Volkswagen in market value, while Korea’s SK Bioscience has jumped 160% in its debut.

These outsized gains have fueled fears of a bubble. The S&P 500 Index is trading at more than 21 times projected earnings next year, well above its 10-year average. Stocks are near their most expensive level since the dot-com bubble of 2000. “As monetary stimulus packages are scaled back and if global growth slows sharply, markets could be heading for a correction,” said Susannah Streeter, senior analyst at Hargreaves Lansdown. Plc. “Overvalued companies will feel pain much faster than others.”

Down to earth

Fund managers have become more selective amid the glut of trades and many have seen their initial gains dissipate. TikTok rival Kuaishou Technology is one of the toughest IPOs of 2021, falling 16% below its listing price after the shares more than initially tripled. The 2021 IPO harvests in the US and Europe are now on average underperforming regional equity benchmarks.

Some IPO stocks disappointed from the start. Some of the high-profile early flops included the 27% drop in the parent company of Indian digital payments provider Paytm last week, the 26% drop in UK food delivery startup Deliveroo, and the 11% drop in l US insurer Oscar Health in March.

In particular in the second half of the year, abandoned listings accumulated, in particular the healthcare real estate company Icade Santé SAS in France, the investment software company Allvue Systems Holdings in the United States and Novotech Health in Hong Kong.

As some have pushed back their IPO plans until 2022, risks to global equity markets are mounting, including spike in inflation that could prompt tighter monetary policies. Interest rate hikes could hamper economic growth and slow earnings dynamics.

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