The value of IPOs globally reached a record high US$453.3 billion in 2021 according to an analysis by EY, an increase of 67 per cent compared to 2020.
In terms of the number of IPO deals globally, which increased 64 per cent to 2,388, 2021 was also a record-breaking year.
Australia was among the top destinations for listings throughout the year with EY recording a 159 per cent rise in the amount of IPOs and a 144 per cent increase in proceeds.
EY Oceania head of M&A Duncan Hogg said the local IPO market had a particularly strong performance in the final quarter of the year, including billion-dollar listings for GQG Partners and APM Human Services.
“Despite lockdowns and inflationary pressures, the equity markets have proven resilient throughout 2021 with IPOs continuing to outperform,” he said.
“Market confidence is expected to continue into the New Year but with an overlay of caution given both economic and potential pandemic headwinds.”
Technology continued its run as the top sector for IPOs globally during the year with 611 deals raising US$147.5 billion, followed by health care and industrials.
“Initial optimism from rebounding economies, COVID-19 vaccine rollouts and rolling liquidity from government stimulus programs provided strong tailwinds,” said EY global IPO leader Paul Go.
“In Q4 2021, however, the winds shifted with the surfacing of the COVID-19 Omicron variant, continuing geopolitical tensions, slowing IPO activity and increased market volatility.”
Activity in the overall Asia-Pacific region lagged behind Australia with a 28 per cent increase in IPOs that raised 22 per cent more proceeds.
“In Greater China, IPO candidates had to adjust to new regulations, which slowed IPO activity. The rest of the region, meanwhile, saw significant increases in IPO activity,” said EY Asia-Pacific IPO leader Ringo Choi.
Europe, the Middle East, India and Africa (EMEIA) were the world leaders in terms of IPO growth after a 158 per cent increase by number and 214 per cent increase by proceeds that led to the most deals seen across the regions since 2007.
The Americas saw an 87 per cent increase in IPOs and 78 per cent increase in proceeds driven by high valuations, the extended low interest rate environment and a strong appetite for equities from investors, according to EY Americas IPO leader Rachel Gerring.
“As we head into 2022, there is cautious optimism that the equity market will remain healthy for new issuers to come to market. Companies looking to go public should continuously consider all options,” she said.
“While a traditional IPO is the most tested form of achieving a public listing, alternative structures are evolving and giving companies more routes to gain access to public markets.”
In the year ahead, EY said that relatively high valuations and market liquidity were supportive of a strong IPO market, but geopolitical tensions, inflation risks and new COVID-19 variants could act as potential headwinds.
“Whether or not IPO-bound companies press pause or forge ahead in 2022, they will need to satisfy investor demands for resilient growth strategies and well-articulated environmental, social and governance (ESG) plans,” said Mr Go.
Jon Bragg
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
