Finance

Spacs take a backseat as traditional IPOs boom globally in second quarter

Listings of special purpose acquisition companies slowed in the second quarter with traditional initial public offerings booming worldwide, overtaking the Spac craze.

The second quarter was the most active by deals and proceeds in the last 20 years, according to data from EY, while US Spacs “stepped out of the driver’s seat” in the second quarter after a high level of activity in the previous 12 months. There were 59 US Spac IPOs raising $12bn in the second quarter.

There were 597 IPOs raising $111.6bn globally in the second quarter, the data from EY and Dealogic showed.

Overall there were 1,070 IPOs, raising $222bn in proceeds worldwide during the first half of 2021.

The firms’ report noted listings were helped due to ample liquidity in financial systems alongside strong global equity market performance.

According to the report, listings in the tech sector were highest, accounting for 27% of all first-quarter deals, with 284 IPOs raising $90.2bn. Deals in the health sector were next with 17% of Q1 deals, raising $33.4bn in for 187 deals. Industrials followed with 150 IPOs raising $24.3bn.

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Spac activity declined dramatically in the US during the second quarter —  59 Spac IPOs raised US$12.0b.

The report noted the lull but said Spac activity is expected to remain steady over the US summer months, picking up speed in the fall. As for traditional US IPO activity, 1H 2021 deal numbers surged in June resulting in 218 IPOs, raising US$84.2b in proceeds.

“The US continues to produce unicorns, seeing 41 unicorn companies launching IPOs in 1H 2021 compared to 27 unicorn listings through all of 2020,” the report said.

European Spac activity increased with a total of 21 Spac IPOs in the first half of the year.

Paul Go, EY global IPO leader, said: “IPO markets put in a strong performance in Q2 2021 as traditional IPOs continued to benefit from the momentum in the first quarter while SPACs took a pause.”

IPO activity in Europe, Middle East, India and Africa surged with 323 IPOs raising $53.8bn in the first half of the year.

Deals also surged in the UK, with 43 IPOs raising $12.7bn in the first half of 2021.

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Martin Steinbach, EY’s leader for IPOs in EMEIA said: “A spectacular bull run in equities markets in H1 2021 led to quadruple the number of IPOs and five times the proceeds year-on-year, we are beginning to see a return to normal in terms of IPO activity.

“This is backed by positive momentum and investor sentiment, high liquidity in the markets looking for returns and an improved economic outlook,” he added.

To contact the author of this story with feedback or news, email James Booth

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