Global IPO transaction volume increased by 85% year-on-year, and fundraising increased by 271%

IPO activities of special purpose acquisition companies are more active than in 2020

The first quarter of 2021 is the best-performing first quarter in two decades

The market sentiment has been active so far in 2021. Calculated by the number of transactions and the amount of funds raised, it has been the best first quarter for the same period in the past two decades. Although the market conditions in the first quarter were traditionally quiet, the first quarter of this year broke the tradition and transactions were very active. Not only the traditional IPO market is active, but also the IPOs of special purpose acquisition companies (SPACs) have also reached new highs. Both the number of transactions and the amount of funds raised in the first quarter were higher than those of the whole of 2020. There were a total of 430 transactions in the global IPO market in the first quarter, raising US$105.6 billion, an increase of 85% and 271% year-on-year respectively.

The “new normal” under the new crown epidemic has stimulated market liquidity and brought new opportunities, and promoted the continuous rise of IPO market sentiment. At the same time, speculative transactions and non-institutional investment platforms that are open to the general public (including the younger generation) have become more popular, making investment more convenient than ever. Looking ahead, due to concerns about the imminent adjustment of the market, investor sentiment remains cautious and will continue to use existing liquidity to obtain investment returns.

The Americas market remained resilient in the first quarter, with 121 transactions and a total of US$45.2 billion in funding. On the whole, the trading volume and funding of the Americas Exchange are the highest in more than two decades. The Asia-Pacific region has the highest IPO funding in two decades, with 200 IPOs totaling US$34.3 billion. The Europe, Middle East, India and Africa (EMEIA) region recovered from the quiet market sentiment of 2020 in the first quarter of 2021, and recorded 109 IPOs with a total amount of US$26.1 billion.

From an industry perspective, the technology industry remains strong in the first quarter of 2021, ranking first with 111 IPOs and US$46.1 billion in funding. The healthcare industry ranked second, with 78 IPOs and a total of 14 billion U.S. dollars raised. Calculated by the number of transactions, the industrial products industry ranked third with 57 transactions and a total of 6.3 billion U.S. dollars in funding.

Ernst & Young Global Listing Services Director Wu Jilong Means:

“Market liquidity has flooded the market, making the number of global IPO transactions and the amount of funds raised have reached new highs in two decades. However, many uncertain factors still exist, which may cause market fluctuations and affect the IPO market.

These factors include: the vaccination plan is slower than expected, and the ongoing epidemic hinders any real economic recovery; the tightening of the regulatory process has slowed down IPO applications and the withdrawal of listing applications by companies; the reduction of leverage by banks has led to increased risks in the capital market, etc. Companies need to prepare for listing while the opportunities in the IPO market are still open. ”

In the first quarter of 2021, the number of IPO market transactions and funds raised in the Americas reached a record high

In the first quarter of 2021, the number of IPO transactions in the Americas increased sharply by 218% (total of 121 IPOs), more than three times that of the first quarter of last year. Funding also recorded a stronger than expected trend, reaching US$45.2 billion, a 446% increase from the same period last year and a record high. The healthcare industry still dominates the region’s IPO transaction volume, with 44 transactions, raising US$8.7 billion. The technology industry ranked first in terms of funding, raising US$21.4 billion, with 33 transactions in total.

Similar to the global market, the US IPO market usually slows down in the first quarter. However, in the first quarter of 2021, benefiting from the continued transactions from 2020 and the high valuation led by issuers using technology companies, there were a total of 99 IPOs in the United States during the quarter, raising US$41.1 billion. The outbreak of SPAC IPO activities will continue into 2021, and the number of transactions in the first quarter of this year has broken the record for the entire year of 2020. Although the number of traditional IPO transactions on US exchanges has also risen sharply in the first quarter of this year, the number of SPAC IPOs is still three times that of traditional IPOs. In the first quarter of 2021, there were a total of 300 SPAC IPOs in the United States, raising a total of 93.4 billion U.S. dollars.

The Asia-Pacific IPO market beats expectations, and the momentum remains positive

In the first quarter of this year, IPO activities in the Asia-Pacific region accounted for nearly half (47%) of the global total. There were a total of 200 transactions in the district during the quarter, raising US$34.3 billion, the highest amount raised in the first quarter in two decades, breaking the record in the first quarter of 2010. As far as the industry is concerned, the technology industry surpasses other industries in terms of the number of transactions and the amount of funds raised. There are 51 transactions and US$17.7 billion in funding.

Cai Weirong, Head of Listing Services, EY Asia Pacific Means:

“This is the first quarter of the new year, and it is also the first year of the new president of the United States. The new team will handle Sino-US relations. In addition, entering the second year of the new crown epidemic, the market is both optimistic and full of optimism. Uncertainty, this may cause volatility in the Asia-Pacific IPO market in 2021. Companies in the Asia-Pacific region need to maintain resilience in this challenging environment in order to successfully go public.”

The strong IPO momentum in Greater China reflects its positive economic growth. Despite the implementation of the new IPO review process by Chinese regulators, the number of transactions and the amount of funds raised in Greater China have increased by 51% (total of 133 transactions) and 121% (US$28.9 billion) respectively year-on-year.

In Greater China, it is expected that the full implementation of the IPO registration system in Mainland China will have a positive impact on the capital market. The registration system is one of the most significant reforms in China’s capital market. The measures will help the market continue to develop in the long term. Together with the delisting mechanism and the newly released IPO approval process, it is expected that the quality of listed companies in Mainland China will gradually be optimized.

In Hong Kong, as economies around the world gradually get back on track and China’s concept stocks continue to be listed on the Hong Kong Stock Exchange, Hong Kong’s IPO activities are expected to remain active.

He Zhaofeng, Head of Listing Services, Ernst & Young Greater China Point out:

“Driven by the economic recovery and abundant market liquidity, IPO activities in the first quarter of 2021 will remain strong. The tightening of the IPO approval process may have a certain degree of impact on A-share listing activities, but the country’s 14th Five-Year Plan It is also good for the listing of companies in related key industries. In Hong Kong, the return of Chinese concept stocks will boost the number of IPOs. Although the volatility of the capital market is expected to increase this year, we believe that 2021 will still be the largest IPO in Greater China. year. ”

EMEIA’s IPO market in the first quarter was more active, optimistic and more unicorns appeared

In the first quarter of 2021, the EMEIA area will take on the momentum of the fourth quarter of 2020 and have a good start. The continued growth of IPO activity in the region stems from high valuations, low volatility and confidence in the gradual restart of the economy. Overall, there were 109 IPOs in the district, a year-on-year increase of 179%. The amount of funds raised was US$26.1 billion, an increase of 646% year-on-year.

Despite the restrictions imposed by the new crown epidemic, the European market remains resilient, and investor sentiment has improved. IPO activity in Europe resumed its trajectory in the first quarter of 2021. The number of transactions rose by 315% (83 cases in total), and the amount of funds raised increased by 1,814% (US$23.1 billion). In the UK, investors are still interested in investing, and companies are taking full advantage of the accelerated growth due to the epidemic and the high liquidity of the market. There were 17 IPO transactions in the UK in the first quarter, raising a total of US$7.5 billion, an increase of 467% and 1,031% respectively.

Outlook for the second quarter of 2021: uncertainty may increase market volatility, triggering a “perfect storm”

Although market sentiment tends to be positive, uncertainties will increase, causing market volatility. The new crown epidemic in various countries around the world may still rebound. In addition, different countries’ vaccination schedules, geopolitical risks, inflation, interest rates and the ability of global financial markets to withstand shocks may all be the trigger points of the perfect storm. Regardless of whether the company decides to conduct a traditional IPO, SPAC or direct listing, companies that are well prepared, are in a hot industry, and have an appropriate investment story should act now and seize the trading opportunities that are still open.

This article is written for the purpose of providing general information and is not intended to be relied upon accounting, taxation, legal or other professional advice. Please ask your consultant for specific advice.