US IPOs break yearly record in less than six months

• US IPOs so far this year have already totalled US$171 billion (roughly A$222.47 billion)
• The figure eclipses 2020’s full-year record of US$168 billion (roughly A$218.57 billion)
• Fuelling the rush is soaring valuations brought on by low-interest rates and monetary stimulus measures
• The next six months are expected to be similar, with several high-profile startups preparing for multi-billion-dollar listings
• By the end of the year, these listings could raise a total of US$250 billion to US$300 billion (A$325.25 billion to A$390.29 billion) or more

As global economies continue to emerge from COVID-induced slumps, Wall Street’s record-breaking run of stock market flotations is showing no sign of slowing down.

With more than six months still to go before the end of the year, initial public offerings in the US have already totalled US$171 billion (roughly A$222.47 billion), eclipsing 2020’s full-year record of US$168 billion (roughly A$218.57 billion), according to data from Dealogic.

Adding fuel to the IPO rush is soaring corporate valuations, which have been heavily inflated by the US Federal Reserve’s low-interest rates and monetary stimulus measures. That has, in turn, given way to a speculative frenzy that benefits not just traditional companies going public, but also special purpose acquisition companies (SPACs) formed exclusively to raise money via IPOs.

The next six months are expected to be similar, with several high-profile startups like China’s ride-sharing service Didi, online brokerage Robinhood and electric vehicle maker Rivian Automative all preparing for multi-billion-dollar listings.

“If the markets hang in anywhere near where they are right now, we are going to be incredibly busy this summer, and into the fall with IPOs,” said Eddie Molloy, co-head of equity capital markets for the Americas at Morgan Stanley.

“Trees don’t grow to the sky forever, so you’re not going to have record volumes every year. But assuming stability, we’d also expect a busy 2022.”

Additional data from Dealogic also shows that the average one-day gain for US IPOs so far this year is 40.5 per cent. That compares to 28.2 per cent in the same period of 2020 and 21.7 per cent in 2019.

By the end of the year, these listings could raise a total of US$250 billion to US$300 billion (A$325.25 billion to A$390.29 billion) or more — an eye-watering sum once considered unthinkable, according to investment bankers.

“Five-hundred million used to be a pretty big IPO. Nowadays everything seems to be in the billions or three-quarters of a billion-plus. So there’s really been an explosion in the size of transactions as well,” said Jeff Bunzel, global co-head of equity capital markets at Deutsche Bank.

“And there seems to be adequate amount of capital out there to help support that level of activity.”