Prepare for a potentially record-breaking wave of IPOs this fall

Prepare for a potentially record-breaking wave of IPOs this fall

An exterior view of the New York Stock Exchange and Wall Street on June 2, 2021.

Kena Betankur | See Press | Corbis News | Getty Images

The IPO pipeline this fall is filling up quickly.

The IPO market is already having its busiest year since the dot-com bubble in 2000, and the decline will likely set a record.

Around 90 to 110 IPOs are expected over the next four months, which will allow it to raise $ 125 billion by 2021 for around 375 deals, according to a new report from Renaissance Capital.

If that happened, it would make 2021 the biggest year on record for total capital raised and the busiest year since the dot-com bubble of 2000.

a solid collapse pipeline

Not only is the declining IPO pipeline strong, it has been highlighted by a number of well-known consumer names:

General public IPO on file
Warby Parker (prescription eyewear retailer, a direct listing)
Fresh market (Fresh produce grocery store)
Genuine Brand (Trademark Licensor – Nautica, Eddie Bower)
Allbirds (durable shoes)

Several other well-known consumer brands have yet to be officially registered, but are expected to go public this year, including:

Instacart (shopping delivery)
Chobani (Greek yogurt)
Sweetgreen (Casual and quick salad restaurant)
Flipkart (India’s largest online retailer, Walmart Spinout)
Impossible Foods (plant-based meat products)

Tech companies are also well represented, including the digital payment processor Toast. Mobile payment processor Stripe is also a likely candidate.

Several crypto firms have also applied to go public, including alternative energy crypto miner Stronghold Digital Mining.

Other possible candidates include TPG (a global asset manager) and Republic Airways (a regional airline).

Even an electric vehicle maker, Rivian Automotive, which is an electric truck / SUV maker, has filed for an IPO.

direct registration

Direct listing should also provide an alternative route to public procurement. So far, only prescription eyewear maker Warby Parker has announced that it will go public via a direct listing, but Instacart is reportedly exploring a direct listing as well.

SPAC: down but not outside

Breaking all PSPC book records, 415 blank check companies raised $ 109 billion in 2021, and another 310 PSPCs are currently on record to raise more than $ 70 billion.

“Due to the widespread decline in PSPC yields and increased regulatory oversight by the SEC, PSPC will have a harder time raising IPO capital than in 2021 in the pipeline,” I told me. Lily McGonagall, IPO Data Analyst at Renaissance.

Will investors get a better deal in the first half of the year?

As the broader market advanced over the summer, IPO investors were disappointed as many high-end tech IPOs performed poorly when interest rates rose in the first quarter. . Others underperformed as open prices were higher.

Result: The IPO’s post-market performance (Performance after the first day of listing) has been negative for most of the year. An investor who put money into an IPO after the first day of trading, on average, has lost money.

The Renaissance Capital IPO ETF, a basket of nearly 60 recent IPOs that tracks aftermarket performance, was flat for the year at the end of August, up 20% for the S&P 500.

However, IPO ETFs have gained momentum in recent weeks. After six months of isolation, the IPO ETF hit its highest level since February.

One reason: The cheaper IPOs in July and August outperformed the latter market.

“The outperformance of IPO ETFs is a sign of a receptive IPO market for companies slated to go public in the fall,” Kathleen Smith of Renaissance Capital told me.

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