IPO activity broke a 20-year record in Q3 when companies rushed to get deals before the Fed stepped down, EY says

IPO activity broke a 20-year record in Q3 when companies rushed to get deals before the Fed stepped down, EY says

IPO activity broke a 20-year record in Q3 when companies rushed to get deals before the Fed stepped down, EY says
Livongo’s IPO in July 2019.

  • Global IPO activity rose to its highest in two decades in the third quarter of 2021, data from Ernst & Young show.
  • That’s when companies rushed to raise capital before the Fed could reduce its asset purchases in the fourth quarter.
  • An important driving force was the rebound of the stock markets in Europe, the Middle East, India and Africa.
  • Sign up for our daily newsletter here, 10 things before the opening clock.

Global listing rose to its highest level in two decades during the third quarter, as companies rushed to raise capital before the Federal Reserve bottled its purchases later this year, data from Ernst & Young shows on Thursday.

The third quarter of the year saw 18% more trades than the record for the third quarter of 2007, according to EY. This quarter also saw 11% higher revenue than the last record third quarter of 2020.

A total of 547 IPOs raised $ 106.3 billion in the third quarter alone, EY data revealed. So far this year, 1,635 companies have gone public so far – a total of $ 330.7 billion – far exceeding the 2020 figure in both contract numbers and revenue.

Month / quarter Number of IPOs Revenue (US Dollars)
July 2019 134 $ 15.4 billion
August 2019 55 $ 6.3 billion
September 2019 62 $ 18.2 billion
3rd quarter 2019 251 $ 39.9 billion
July 2020 147 $ 33.4 billion
August 2020 123 $ 22.6 billion
September 2020 175 $ 40.2 billion
3rd quarter 2020 445 $ 96.2 billion
July 2021 276 $ 46.2 billion
August 2021 110 $ 32.1 billion
September 2021 161 $ 28.0 billion
3rd quarter 2021 547 $ 106.3 billion

A major driver was the rise in the stock market in Europe, the Middle East, India and Africa with 476 listings, increasing $ 73.7 billion year to date, says EY, an increase of 263% and 313%, respectively. But the break in the boom of blank-check IPOs in the second quarter also spilled over into the third, EY added.

Over in the Asia-Pacific region, the region continued to be active despite some signs of slowdown due to geopolitical tensions in the region. In the third quarter, 750 IPOs raised $ 123.4 billion since the beginning of 2021. Greater China accounted for the largest share of IPOs (444), followed by Japan at a far different level (81).

In America, the market has picked up speed, with 409 IPOs raising $ 1336 billion. The level of SPAC activity is cooling in relation to the tremendous speed of the first quarter, as the room continues to face regulatory headwinds. Still, publishing through a SPAC remains an attractive option for many companies, EY said.

In terms of sectors, technology companies again dominated the list. For the fifth year in a row since the third quarter of 2020, companies in this area generated the highest number of annual trades to date, EY said. Health and industrial sectors followed.

“As we enter the last quarter and market uncertainties and volatility continue to intensify, it is important to be well prepared, consider alternatives to the traditional listing and be realistic in terms of valuation to ensure success,” said Paul Go, EY Global IPO Leader, in a statement.

Still, the company said it expects a stable pipeline of deals to continue despite political tensions, inflation risks, the downsizing of the US Federal Reserve, as well as new variants of COVID-19.

EY noted that serious listed candidates should seek to “prepare as early as possible and be ready to start quickly” if necessary.

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