Global IPO market enjoys exceptional year in 2021

29 December 2021 Consultancy.uk 3 min. read
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The global volume of initial public offerings boomed by 64% through 2021, while proceeds raised also spiked 67% year-on-year. Much of the trend was buoyed by initial optimism of the year, however, suggesting 2022 may be more subdued.

New research from EY has found that despite the uncertain environment that 2021 promised, initial public offerings (IPOs) performed exceedingly well throughout the year. In fact, the performance of the global IPO market was so strong that it broke records in terms of both volume and proceeds well into the fourth quarter of the year.

Paul Go, EY Global IPO Leader, commented, “2021 was the most active year for the IPO market over the past 20 years.”

Full-year comparison

As 2021 began with the long awaited roll out of Covid-19 vaccines, markets glimpsed light at the end of the tunnel, while ample liquidity in the market hastened by government stimulus programmes resulted in optimism for global IPO markets. As a result, the fourth quarter of 2021 was the most active fourth quarter by deal numbers since the fourth quarter of 2007 – seeing a 621 IPO increase in volume, or 16% growth on 2020, and a $112.2 billion spike in proceeds, or 9% improvement on the same period last year. Overall, meanwhile, global markets experienced overall increases by both IPO volume and proceeds, but Europe, the Middle East, India and Africa (EMEIA) exchanges produced the highest growth.

EMEIA experienced a groundswell of highs and lows through this year. It enjoyed a 158% increase by IPOs, or 724 deals, along with a 214% increase in proceeds worth $109.4 billion. Specifically, Europe saw the bulk of these gains, with a boost of 485 IPOs, and $81.1 billion in proceeds. This included solid activity in the UK, where a 223% increase in deals  added 97 IPOs to its annual tally, and an 81% rise by proceeds worth $21.2 billion.

However, Go noted that while 2021’s market was characterised by optimism in the region, the subsequent relapses of the pandemic across the continent have upended supply chains, and this will pose risks going into the new year. At the same time, a withdrawal of government stimulus and increasing geopolitical tensions may also see IPO activity decline in 2022.

IPO activity vs. MSCI World Index

Go added, “The winds shifted with the surfacing of the COVID-19 omicron variant, continuing geopolitical tensions, slowing IPO activity and increased market volatility. 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 plans.”

A slowdown in IPO activity is by no means a foregone conclusion though. Despite everything, relatively high valuations and market liquidity are keeping the IPO window open in 2022. But IPO candidates can expect higher market volatility and should therefore remain flexible with a plan B in place to meet financing needs in case the IPO timetable is delayed.

Concluding, Go remarked, “While the positive momentum of 2021 is expected to carry into 2022, it will be imperative for IPO-bound companies to adopt a resilient and flexible strategy that is able to adapt to shifting market conditions, evolving regulations and geopolitical tensions.”