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Analysis: Record IPO binge in 2021 leaves investors hung over

Friday, December 24, 2021
Analysis: Record IPO binge in 2021 leaves investors hung over © Reuters. FILE PHOTO: Signage is seen directing people to wear face masks at the New York Stock Exchange (NYSE) as the Omicron coronavirus variant continues to spread in Manhattan, New York City, U.S., December 20, 2021. REUTERS/Andrew Kelly

By Echo Wang and Abhinav Ramnarayan

NEW YORK/LONDON (Reuters) - Initial public offerings (IPOs) around the world raised a record $594 billion in 2021, riding the coattails of stock market rallies, yet often disappointing investors with their subsequent stock performance.

Companies ranging from technology start-ups to blank-check acquisition firms flooded the market with offerings, capitalizing on investors' willingness to place speculative bets as low interest rates and the re-opening of economies thanks to COVID-19 vaccines fueled their appetite for risk.

"It was a truly euphoric capital market when you put it in the context of new issuance activity, and in particular in the creation of new public companies," said Andrew Wetenhall, co-head of equity capital markets in the Americas at Morgan Stanley (NYSE:MS).

Some of those bets worked out. Those who bought into the $$1.2 billion IPO of lending start-up Affirm Holdings Inc, backed by PayPal Holdings Inc (NASDAQ:PYPL), in January have more than doubled their money, versus a 25% return in the S&P 500 index.

But many IPOs soured. Shares of Swedish vegan milk maker Oatly Group (NASDAQ:OTLY) AB, which raised $1.4 billion in its IPO in New York in May, are down 53%, while those of British food delivery app Deliveroo Plc, which raised 1.5 billion pounds ($2.1 billion) when it listed in London in March, are down 46%.

The Renaissance IPO index, which tracks the average performance of newly listed U.S. IPOs, is down about 8% for the year, compared with a 25% rise in the S&P 500 index.

Some bankers cautioned that shares of some of the companies that went public in 2021 are still trading at historically high valuations, even if they took a hit after their IPO. This is because many investors were willing to pay top dollar to buy into these companies in private fundraising rounds in the run-up to their IPOs.

"The issue is that buyers of these IPOs as well as after-market buyers are marking losses," said Paul Abrahimzadeh, co-head of North America equity capital markets at Citigroup Inc (NYSE:C).

A total 2,097 IPOs, excluding those of special purpose acquisition companies (SPACs), raised $402 billion in 2021 globally, according to data provider Refinitiv. That was an 81% increase in proceeds and a 51% rise in the number of IPOs from 2020.

Including SPACs, which are shell companies that typically launch when they have lined up investors, IPO proceeds in 2021 reached $594 billion, according to data vendor Dealogic.

The biggest sectors driving IPO volumes were technology and healthcare. There were 426 technology IPOs launched this year and 332 healthcare-related deals, collectively accounting for almost 42% of IPO proceeds raised by companies globally, according to Refinitiv.

Among the biggest offerings in 2021 was electric-vehicle maker Rivian Automotive Inc, which raised over $12 billion in its market debut in November, making it the largest U.S. IPO since Alibaba (NYSE:BABA) Group Holding Ltd in 2014.

Other major ones included Chinese online video company Kuaishou Technology, with $5.4 billion in proceeds, and Korean e-commerce giant Coupang Inc, which raised $4.6 billion.

"It has been an extraordinary year for equity formation globally - dare I say one that is unlikely to be repeated any time soon," said James Fleming, global co-head of equity capital markets at Citigroup Inc.

SPACS RETREAT

SPACs, which went public mostly in New York, raised a total of about $160 billion this year, accounting for 28% of the total proceeds raised by U.S. IPOs, according to Refinitiv.

They had a roller-coaster ride as investor enthusiasm for them at the beginning of the year turned to disappointment because of their poor returns.

The main SPAC exchange-traded fund, the Defiance Next Gen SPAC Derived ETF, has shed 25% of its value year-to-date after peaking in February.[L4N2N13S5]

"The peak pace of (SPACs) activity was never sustainable and now the market is consolidating. But SPACs are not going away," said Eddie Molloy, co-head of equity capital markets in the Americas at Morgan Stanley.

The IPO pipeline for the first quarter of 2022 is strong, with social media platform Reddit, transportation tech start-up Via, software maker Cohesity and private equity firm TPG having filed with regulators to go public.

Still, investment bankers say the recent lukewarm financial performance of many IPOs means that this year's bonanza is unlikely to be repeated in 2022, especially if stock markets lose some steam because of inflation and other economic concerns.

There is also regulatory risk. The U.S. Securities and Exchange Commission has cracked down on the New York listings of Chinese firms, requiring more disclosures. Ride-hailing giant Didi Global Inc, which completed its $4.4 billion IPO in New York in June, has said it will move its listing to Hong Kong, as China pushes many of its companies to go public closer to home.

"I have to think (2022) will be a down year on global issuance levels," Fleming said.

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21-01-2022 04:02:30 (UTC+7)

EUR/USD

1.1332

+0.0022 (+0.19%)

Summary

Sell

Moving Avg:

Buy (4)

Sell (8)

Indicators:

Buy (1)

Sell (5)

EUR/USD

1.1332

+0.0022 (+0.19%)

Summary

Sell

Moving Avg:

Buy (4)

Sell (8)

Indicators:

Buy (1)

Sell (5)

GBP/USD

1.3564

-0.0031 (-0.23%)

Summary

↑ Sell

Moving Avg:

Buy (1)

Sell (11)

Indicators:

Buy (1)

Sell (6)

USD/JPY

114.00

-0.09 (-0.07%)

Summary

↑ Buy

Moving Avg:

Buy (8)

Sell (4)

Indicators:

Buy (7)

Sell (1)

AUD/USD

0.7188

-0.0037 (-0.51%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (2)

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USD/CAD

1.2529

+0.0027 (+0.22%)

Summary

Neutral

Moving Avg:

Buy (10)

Sell (2)

Indicators:

Buy (3)

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EUR/JPY

129.18

+0.14 (+0.11%)

Summary

↑ Buy

Moving Avg:

Buy (11)

Sell (1)

Indicators:

Buy (10)

Sell (0)

EUR/CHF

1.0356

-0.0008 (-0.08%)

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Buy (4)

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Gold Futures

1,830.85

-11.75 (-0.64%)

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↑ Sell

Moving Avg:

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Indicators:

Buy (1)

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Silver Futures

24.365

-0.351 (-1.42%)

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↑ Sell

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Copper Futures

4.5260

-0.0565 (-1.23%)

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↑ Buy

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Indicators:

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Crude Oil WTI Futures

84.06

-1.49 (-1.74%)

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↑ Buy

Moving Avg:

Buy (12)

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Indicators:

Buy (8)

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Brent Oil Futures

87.01

-1.37 (-1.55%)

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↑ Buy

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Indicators:

Buy (7)

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Natural Gas Futures

3.928

+0.126 (+3.31%)

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↑ Sell

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Buy (3)

Sell (9)

Indicators:

Buy (1)

Sell (7)

US Coffee C Futures

242.75

-1.70 (-0.70%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (10)

Euro Stoxx 50

4,241.15

-58.46 (-1.36%)

Summary

↑ Buy

Moving Avg:

Buy (8)

Sell (4)

Indicators:

Buy (9)

Sell (0)

S&P 500

4,482.73

-50.03 (-1.10%)

Summary

↑ Sell

Moving Avg:

Buy (1)

Sell (11)

Indicators:

Buy (0)

Sell (8)

DAX

15,689.11

-223.22 (-1.40%)

Summary

↑ Buy

Moving Avg:

Buy (7)

Sell (5)

Indicators:

Buy (8)

Sell (0)

FTSE 100

7,515.40

-69.61 (-0.92%)

Summary

Neutral

Moving Avg:

Buy (5)

Sell (7)

Indicators:

Buy (8)

Sell (0)

Hang Seng

24,965.55

+13.20 (+0.05%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (5)

Sell (0)

US Small Cap 2000

2,024.04

-38.75 (-1.88%)

Summary

↑ Sell

Moving Avg:

Buy (4)

Sell (8)

Indicators:

Buy (2)

Sell (7)

IBEX 35

8,682.56

-132.04 (-1.50%)

Summary

↑ Buy

Moving Avg:

Buy (7)

Sell (5)

Indicators:

Buy (9)

Sell (0)

BASF SE NA O.N.

66.505

-0.935 (-1.39%)

Summary

Neutral

Moving Avg:

Buy (5)

Sell (7)

Indicators:

Buy (11)

Sell (0)

Bayer AG NA

51.94

-0.76 (-1.44%)

Summary

↑ Buy

Moving Avg:

Buy (7)

Sell (5)

Indicators:

Buy (7)

Sell (1)

Allianz SE VNA O.N.

221.50

-3.30 (-1.47%)

Summary

↑ Sell

Moving Avg:

Buy (1)

Sell (11)

Indicators:

Buy (1)

Sell (9)

Adidas AG

255.35

-0.30 (-0.12%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (8)

Sell (0)

Deutsche Lufthansa AG

6.966

-0.127 (-1.79%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (7)

Siemens AG Class N

145.68

-1.22 (-0.83%)

Summary

↑ Buy

Moving Avg:

Buy (8)

Sell (4)

Indicators:

Buy (10)

Sell (0)

Deutsche Bank AG

11.547

-0.129 (-1.10%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (3)

Sell (5)

 EUR/USD1.1332Sell
 GBP/USD1.3564↑ Sell
 USD/JPY114.00↑ Buy
 AUD/USD0.7188↑ Sell
 USD/CAD1.2529Neutral
 EUR/JPY129.18↑ Buy
 EUR/CHF1.0356Sell
 Gold1,830.85↑ Sell
 Silver24.365↑ Sell
 Copper4.5260↑ Buy
 Crude Oil WTI84.06↑ Buy
 Brent Oil87.01↑ Buy
 Natural Gas3.928↑ Sell
 US Coffee C242.75↑ Sell
 Euro Stoxx 504,241.15↑ Buy
 S&P 5004,482.73↑ Sell
 DAX15,689.11↑ Buy
 FTSE 1007,515.40Neutral
 Hang Seng24,965.55↑ Buy
 Small Cap 20002,024.04↑ Sell
 IBEX 358,682.56↑ Buy
 BASF66.505Neutral
 Bayer51.94↑ Buy
 Allianz221.50↑ Sell
 Adidas255.35↑ Buy
 Lufthansa6.966↑ Sell
 Siemens AG145.68↑ Buy
 Deutsche Bank AG11.547↑ Sell
Mua/Bán 1 chỉ SJC
# So hôm qua # Chênh TG
SJC Eximbank6,120/ 6,160
(5/ 5) # 1,140
SJC HCM6,115/ 6,175
(5/ 5) # 1,155
SJC Hanoi6,115/ 6,177
(5/ 5) # 1,157
SJC Danang6,115/ 6,177
(5/ 5) # 1,157
SJC Nhatrang6,115/ 6,177
(5/ 5) # 1,157
SJC Cantho6,115/ 6,177
(5/ 5) # 1,157
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Ngoại tệMua vàoBán ra
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KRW16,3919,97
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