In June, July, and August, initial public stock offerings (IPOs) could raise more than $40 billion, according to bankers contacted by the Wall Street Journal.
That amount would far surpass 2020’s record $32 billion for the same three-month span, according to data from monitoring firm Dealogic.
Through 8 June, IPOs have already raised $63 billion this year, putting 2021 on pace to be the richest year yet for initial offerings.
The figures do not include IPOs done through special-purpose acquisition companies (SPACs), which raised $105 billion this year through May, according to data service SPAC Research.
Some bankers are working with as many as two dozen companies that have filed initial paperwork that could lead to an IPO and say the frenzy is more intense than during the 1990s’ dot-com craze, according to the WSJ.
“We believe this year…will be the busiest yet,” James Cooney, chief of U.S. capital markets at Bank of America, told the WSJ.
Didi Chuxing, a Chinese ride-hailing service, could go public at $70 billion; Robinhood, the app used by meme-stock pickers, might raise $40 billion on its first day, insiders told the WSJ.
Clarios, which makes car batteries, hopes to see a market value of $30 billion when it goes public next month.
Krispy Kreme and SentinelOne, a cybersecurity firm, also aim for IPOs in July.
The IPO market cooled earlier this spring and several issues were postponed as investors shied away from SPACs (see “SPACs’ Value Shrinks Under Regulators’ Scrutiny,” Trends Journal, 20 April, 2021) and share prices for several newly-public companies sank below their opening values (“Gamblers Dump SPACs,” Trends Journal, 25 May, 2021).
More recently, the economy has shown signs of stabilizing, investors are returning to tech stocks, and some IPOs have performed well.
Non-SPAC IPOs are collectively up 6.9 percent this year as of 8 June, Dealogic said; the tech-heavy NASDAQ has gained 8.8 percent so far this year and is near its all-time record.
Also, market confidence has been strengthened by the smaller size of deals, the WSJ noted.
After averaging $428 million during this year’s first quarter, IPOs are raising about $360 million, Dealogic reported, with the smaller sizes bolstering both demand and prices.
TRENDPOST: With SPACs losing favor, more companies are planning to issue IPOs in the usual way. That not only makes more companies attractive to risk-averse investors but also frees more money to put into promising new ventures.