Last year was exceptionally busy for the global IPO market, seeing more activity than any year in the last 20.
According to Ernst & Young’s annual global IPO report, there were 2,388 IPO deals in 2021, representing a 64% increase year-over-year from 2020. Of these, 416 listings were on the primary United States exchanges (NASDAQ and NYSE).
Additionally, a record number (613) of special purpose acquisition companies (SPACs) went public in 2021, raising more than $162 billion in gross proceeds.
- 2,388 traditional IPOs, a 64% increase over 2020
- More than $453 billion raised for traditional IPOs and $162 billion for SPAC IPOs
- 416 traditional listings in the U.S.
- 613 SPAC IPOs
SPACs saw record activity in 2021, peaking in the first quarter. However, heightened regulatory scrutiny in the second quarter contributed to a decline of SPAC issuances through 2021. Ernst & Young expects the SPAC market to continue to play an important role in the IPO market this year, though not to the levels we saw in 2021. Interestingly, the report notes that the decreased rate of SPAC issuances could correlate to an increase in the quality of de-SPAC transactions in 2022.
So, what IPO trends can we expect through 2022?
While there was ample liquidity in the equity markets last year, the waning global IPO activity in Q4 2021 hints at what is likely in store for 2022. Interest rates are increasing, which will make borrowing money more expensive. Mainland China’s cybersecurity review requirements for companies seeking to list abroad may depress the Chinese IPO market; similarly, issuances out of Eastern Europe and Russia may also decline due to the current conflict.
Factor in lackluster results in the SPAC listing market -- with many SPAC-listed companies trading below their highs by the end of 2021 -- as well as external forces such as the ongoing supply chain issues, market volatility due to the ongoing COVID-19 pandemic, and the aforementioned geopolitical uncertainty, and it is reasonable to expect a slowdown in the IPO market this year.
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