- Global IPO volumes rose 64% and proceeds rose by 67% year-on-year (YOY)
- Q4 2021 was the most active fourth quarter by deal numbers since Q4 2007
- Europe, the Middle East, India and Africa (EMEIA) exchanges produced the highest growth
In the face of the uncertain environment that 2021 promised, the global IPO market had an exceptional year, breaking records by IPO volume and proceeds consistently into the fourth quarter. In the last quarter, the winds shifted with the surfacing of the COVID-19 omicron variant, continuing geopolitical tensions and increased market volatility. Overall, 2021 saw a total of 2,388 deals raising US$453.3b in proceeds, a 64% and 67% respective increase YOY.
These and other findings were published on Thursday in the 2021 EY Global IPO Trends Report.
2021 began with COVID-19 vaccine rollouts, a rebound of global economies and ample liquidity in the market hastened by government stimulus programs resulting in optimism for global IPO markets. Q4 2021 was the most active fourth quarter by deal numbers since Q4 2007, seeing a 16% (621) and 9% (US$112.2b) increase by both total IPOs and by proceeds respectively, compared to Q4 2020.
All global markets experienced overall increases by both IPO volume and proceeds, but Europe, the Middle East, India and Africa (EMEIA) exchanges produced the highest growth, seeing a 158% increase by number of IPOs (724) and a 214% increase by proceeds (US$109.4b). The Americas remained hot as well, ending the year with 528 IPOs raising US$174.6b by proceeds, an 87% and 78% increase respectively. The Asia-Pacific region experienced relatively modest growth, resulting in 1,136 IPOs (28% increase) and raising US$169.3b by proceeds (22% increase).
“In 2021 equity markets delivered 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 17th, total market capitalization on the main segment of the Bucharest Sock Exchange reached EUR 44 billion, while YTD gross returns on the BET index topped 27.0%.
2021 marked a record year for equity and bond listings. Corporate bonds took the lion’s share of the listings this year with a total of 29 new issues for a total amount of EUR 932.5 million. BCR and Raiffeisen Bank were the largest issuances (EUR 425.5m and 326.6m, respectively), followed by Autonom with EUR 48 million, Agricover Holding and Libra Internet Bank with EUR 40 million each.
The year brought 23 equity listings of which three IPOs on the main market for a total value of EUR 185.2 million: Transport Trade Services (TTS) for EUR 58.5 million, One United Properties (ONE) for EUR 52.6 million and Aquila Part Prod Com (AQ) for EUR 74.1 million. Interest in flotations on the alternative segment, AeRO, was also high with 20 new launches that totaled EUR 48.6 million with technology, consumer products and retail the main sectors for IPO activity”, added Andrei Eftimie, Associate Partner, Capital Debt Advisory, Strategy and Transactions, EY Romania.
Globally, the technology sector saw the highest number of IPOs (611) for the sixth consecutive quarter (since Q3 2020) and raised the highest proceeds (US$147.5b) for the seventh consecutive quarter (since Q2 2020). Health care raised the next highest number of IPOs by volume and proceeds, seeing 376 IPOs raise US$65.4b by proceeds. Industrials was close behind health care, with 310 IPOs raising US$63.1b by proceeds.
EMEIA IPO markets experienced the highest year-on-year growth
EMEIA experienced a groundswell of highs and lows through this year. Thanks to a positive environment for entrepreneurs providing high returns and low risk, EMEIA exchanges performed extraordinarily well, resulting in the highest growth rate among all three regions with a 158% increase by IPOs (724 deals) and 214% increase by proceeds (US$109.4b). The region’s continual waves of COVID-19 infections and an upended supply-chain may pose risks heading into Q1 2022.
Europe saw gains with 485 IPOs (154% increase), raising US$81.1b by proceeds (195% increase). The Middle East and North Africa (MENA) also saw significant increases with deal numbers and proceeds rising 205% and 281% respectively (113 IPOs, US$11.0b). As economies in these areas rebound, oil prices remain favorable and companies with strong fundamentals continue to receive ample investor interest. In India, 2021 IPO activity increased 156% by deal number and 314% by proceeds YOY (110 IPOs, US$16.9b). Activity in the UK also remained strong, seeing a 223% increase in deals (97 IPOs) and an 81% rise by proceeds (US$21.2b).
Optimism, liquidity and COVID-19 vaccines drive a banner year for the Americas
The Americas experienced a bullish year, bolstered by low interest rates, high liquidity, buoyant stock markets, improved consumer sentiment and overall optimism driven by the COVID-19 vaccine rollout in some countries. Overall, the region saw 528 IPOs raise US$174.6b by proceeds, an 87% and 78% respective increase. Health care remained the region’s top sector by volume with 172 IPOs raising US$32.2b by proceeds, however, technology was the top performer by proceeds with 152 IPOs raising US$72.2b. Moving into the new year, as the Americas markets continue to evolve and test the traditional IPO model, the structure and format of IPOs are set to continue to evolve, helping issuers better achieve their goals in pursuing a public listing.
The US IPO market remains red hot with 2021 overall on track to be the most active in the 21-year history of this report, with 416 IPOs raising US$155.7b by proceeds, representing an 86% and 81% YOY increase. US special purpose acquisition company (SPAC) IPOs claimed fame in 2021, with US exchanges seeing more SPACs than traditional IPOs. SPACs have shown remarkable resilience, and the US will likely continue to dominate the SPAC space.
Asia-Pacific sees modest gains in 2021
IPO activity in the Asia-Pacific region maintained a steady pace through 2021 with deal numbers (1,136) and proceeds (US$169.3b) rising 28% and 22% respectively YOY. While these gains are impressive, they are modest relative to the record-setting IPO activity that the Americas and EMEIA experienced this year. As for sectors, technology saw the highest number of deals (257) and raised the most proceeds (US$45.4b) through the year.
Greater China experienced a slow-down following Q3 2021, partly due to Mainland China’s tightened cybersecurity review requirements for cross-border IPO-bound companies that fall into certain criteria. This, combined with US SEC guidelines mandating that foreign issuers in the US must comply with US SEC and Public Company Accounting Oversight Board (PCOAB) inspection rules, dampened sentiment and resulted in several Chinese mega-IPOs delaying or changing their IPO plans. Overall Greater China saw an 11% increase in IPOs (593) and 3% increase by proceeds (US$122.8b).
Japan generated the highest number of IPOs launched in a single year since 2006, with 128 IPOs raising US$6.8b by proceeds in 2021 – a 38% and 104% respective increase YOY.
Q1 2022 outlook: prepare for headwinds but capitalize on high valuations for now
Looking ahead to the new year, both 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 hamper full economic recovery are all at play. Despite all of this, relatively high valuations and market liquidity are for now keeping the IPO window open in 2022. IPO candidates can expect higher market volatility and should therefore remain flexible with a plan B in place to meet financing needs in case the IPO timetable is delayed.