Tech and pharma lead global IPO boom

The number of stock market listings across the globe this year has surpassed all initial public offering (IPO) activity throughout 2020, new data has shown.

According to EY, global volumes have risen 87%, and proceeds have increased by 99% year-on year.

The data showed that the most recent quarter of 2021 was the most active third quarter by deal number and proceeds in the last 20 years.

Quarter three saw 18% more deals than the previous third quarter record, which was set in 2007, and 11% higher proceeds than the last record-setting Q3 in 2020.

The IPO market continued to boom as the global economy recovered from the coronavirus pandemic, with a total of 1,635 stock market listings so far this year, raising $330.7bn (£245.2bn).

On a regional level, Europe, the Middle East, India and Africa (EMEIA) outperformed the Americas and Asia-Pacific (APAC), with a surge of 476 IPOs year-to-date. This has raised $73.7bn, an increase of 263% compared to last year, and 313% higher on the year prior to that.

Technology firms, healthcare and industrials continued to lead the charge, with added interest in special purpose acquisition companies (SPACs).

SPACs, or so-called “black cheque” companies, have boomed in popularity over the last year. They are companies with no business operations that raise money through a stock market listing and then use that money to buy another business.

SPAC investors are typically retail investors and these structures can give them access to private investments they would otherwise not be able to reach. For companies that sell to SPACs, these types of deals offer a quick and relatively easy way to list on the stock market.

Watch: What are SPACs?

Over $100bn has been raised through SPACs in just the last 12 months and the total raised in 2021 has already surpassed that of 2020.

Notable examples of companies that have gone public through SPACs include Nikola (NKLA), DraftKings (DKNG), and Virgin Galactic (SPCE). Social Capital founder Chamath Palihapitiya is the best known SPAC "sponsor," as founders of the vehicles are known.

EY revealed that technology generated the highest year-to-date number of deals (419) for the fifth consecutive quarter since Q3 2020, raising the highest amount in proceeds for the sixth consecutive quarter.

Healthcare followed with 287 IPOs, followed by industrials with 204 listings.

However, EY warned that going forward there were a number of uncertainties surrounding the IPO market, including geopolitical tensions, regulatory changes in flux, inflation risks and tapering by the US Federal Reserve.

The accounting firm also pointed to new variants of COVID-19 that are disrupting a full global economic recovery, and affecting a number of sectors.

Read more: IPO watch: From DarkTrace to Deliveroo, the winners and losers of London listings

“As we head into the last quarter and market uncertainties and volatility continue to intensify, it is important to be well prepared, consider alternatives to the traditional IPO route and be realistic on valuation to ensure success,” said Paul Go, EY Global IPO Leader.

It comes as shares in Oxford Nanopore Technologies rocketed on its market debut on Thursday in what has become London's biggest biotech listing, valuing the firm at $6.84bn (£5.1bn).

The DNA-sequencing company, which provides COVID-19 test kits to the NHS, had priced its shares in its initial public offering (IPO) at 425p each. This was in the top half of an initial range after selling more shares than planned due to high demand.

However, the stock rocketed during its first day of trading, climbing 45% from its flotation price to as much as 619p within an hour.

This puts it on course to beat Boohoo’s (BOO.L) record 40% jump at its market debut in 2014.

Watch: NYSE's Cunningham Sees 'Really, Really Strong' IPO Pipeline