The efficient customer service in the future of powered mobility (EVs) and other green projects, the rise of completely empty corporations, and corporate interests around the world wanting to take advantage of elevated prices have all contributed to a good year for initial public offerings (IPOs). Initial public offerings (IPOs) have increased globally over the following year, according to data.
What’s astonishing is that the IPO boom is occurring despite global economic disruptions caused by COVID. Several districts were placed on complete lockdown at various points, and businesses such as hospitality, travel and tourism, and aviation all suffered significant losses as a result of the pandemic. Despite this, the equity markets have largely done well, which may explain the success of this year’s IPOs.
According to a Bloomberg article, about 2,850 corporate entities have raised over $600 billion through IPOs as the year draws to a close. According to the data, this is a new high in terms of both the number of public offerings and the money raised, surpassing the previous peak set in 2007.
According to analysts, a significant percentage of the increase can be linked to regulatory and policy actions, as well as market dynamics. Long periods of bullishness in numerous markets pushed companies to go public.
Government stimulus packages, both advanced and emerging, raised cash on hand and encouraged investors to invest in initial public offerings (IPOs). According to the research, the stimulus measures also bolster
Rivian Automotive Inc., a US-based EV start-up, may have had a remarkable first issue due to the rapid expansion of the green energy market. The company raised roughly $12 billion in its initial public offering (IPO) earlier this month, making it the year’s largest. According to Bloomberg, the largest IPO in Asia was China Telecom Corp’s IPO, which raised $8.4 billion in August.
The top IPO firm in Europe was parcel-locker services provider InPost SA, which raised $3.2 billion in an IPO in Amsterdam.
SPAC Is Receiving A Lot of Attention
Special purpose acquisition companies (SPACs), sometimes known as blank-cheque businesses, have been the talk of the town this year, with IPOs hitting a peak of $159 billion. The tendency was so widespread that Nasdaq, a SPAC favourite, surpassed London as the most sought-after IPO location in 2021.
A SPAC uses the ‘system’ to raise money through an IPO and then use that money to buy a private company anywhere in the world. This allows the other company to have immediate access to major financial markets, such as the United States, without having to conduct its own IPO. It’s legal and ethical, but regulators throughout the world are cracking down on it for fear of abuse. The associated accounting processes and monitoring rules, for example, are becoming more stringent in the United States.
As many foresee a market correction next year, a similar impact on IPOs — both in terms of numbers and proceeds — is likely. According to sources, some cooling has already occurred, with companies deferring their public offerings until 2022.