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The global market for initial public offerings is on its way to see its biggest-ever first quarter, even as uncertainties are looming around the U.S.-led surge in blank-check listings, per Bloomberg, as quoted on economictimes.
There have been 79 IPOs priced this year, up 229.2% from last year, per renaissancecapital. Total proceeds raised were $41.4 billion this year, up 512.4% from last year. About 110 IPOs were filed this year, marking an increase of 233.3% from last year.
There have been 276 SPAC IPOs this year, with healthcare taking almost half the total volume, followed by technology (24% weight). The recent resurgence in blank check and Special Purchase Acquisition Companies (SPAC) has been one of the main reasons for the rally in IPO ETFs.
The COVID-19 situation has made the Blank Check route more appealing for going public as virtual road shows are less effective. The route is also less complicated and pricey.
A Sneak Peek at 2021’s IPOs
Globally a record $162.4 billion has been raised by more than 600 issuers in 2021 this year, the most ever at this point in the year, data compiled by Bloomberg revealed, with special-purpose acquisition companies making up half of the proceeds. In comparison, just $37 billion was raised in the year-ago quarter, as quoted on Economic Times. Cheaper valuation and upbeat markets have been driving this euphoria.
Especially, Europe has been witnessing deals after two years of muted activity. Amazon-backed Deliveroo – the food delivery app and the pandemic winner – looks at valuation of up to $12 billion in its London IPO. Vodafone Group also seeks $3.1 billion from Vantage Towers IPO.
Among the recently priced U.S. IPOs, Viant Technology (DSP) (up 139%), ZIM Shipping (ZIM) (up 78.5%), Bolt Biotherapeutics (BOLT) (up 67%), Bumble (BMBL) (up 59%), loanDepot (LDI) (up 48.1%), Sun Country Airlines (SNCY) (up 46.9%) and Instil Bio (TIL) (up 34%) are some of the hot IPOs that have seen a huge surge in returns from IPO this year.
What Lies Ahead?
The IPO pipeline is still solid. Still, the upbeat trend is losing impetus asmarkets are wavering on rising rate worries and the apparent demise of pandemic winners – growth stocks. An index that tracks SPAC listings has fallen about 17% from a February high, on bubble fears in that corner of the market. Though the SPAC euphoria is still alive and kicking as evident from WeWork’s latest intention to go public via the SPAC route, we expect the winning Q1 momentum to lose somewhat in Q2.
“Demand for IPOs remains high, although as yields rise it is possible that some of the lofty valuations may need to be revisited,” said Lewis Grant, a senior portfolio manager at the international business of Federated Hermes. Still, “truly disruptive companies with a unique offering, particularly with a sustainable edge, are likely to find demand for their offering regardless of the wider market,” the Bloomberg article indicated.
On a positive note, the IPO market now has stepped into various other sectors apart from technology from where it has received the main traction so far. On a flip side, the SEC is planning to take stringent stance toward blank-check companies. Bankers expect the SPAC craze to hit foreign shores more, though only a handful of blank-check firms have listed in Europe and Asia so far, per the Bloomberg article.
Against this backdrop, investors can bet on the following ETFs.
Defiance NextGen SPAC IPO ETF
The underlying Indxx SPAC & NextGen IPO Index of the fund SPAK tracks the performance of the common stock of newly listed Special Purpose Acquisition Companies (SPACs), ex-warrants, and IPOs derived from Acquisition Companies over the preceding 36 months.
An 80% weighting is attached to IPO companies derived from SPACs and 20% is allocated to the common stocks of newly listed Special Purpose Acquisition Companies. The fund charges 45 bps in fees.
The underlying Renaissance IPO Index is a portfolio of newly U.S.-listed IPOs of companies whose unseasoned equities are under-represented in core U.S. equity indices. Notably, IPOs that meet liquidity & operational screens are included on the index at the end of the fifth day of trading, or upon quarterly reviews, weighted by tradable float, capped at 10% and removed after two years. The fund charges 60 bps in fees (read: Rivian IPO Prospect Opens Opportunities for These ETFs).
The underlying Renaissance International IPO Index is a stock market index based upon a portfolio of non-U.S.-listed newly public companies, prior to their inclusion in global core equity portfolios. The fund charges 80 bps in fees. China (38.5%), Japan (11.3%) and United Kingdom (6.0%) are the top three geographies of the fund. The fund charges 80 bps in fees.
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Record Q1 for Global IPOs? ETFs in Focus
The global market for initial public offerings is on its way to see its biggest-ever first quarter, even as uncertainties are looming around the U.S.-led surge in blank-check listings, per Bloomberg, as quoted on economictimes.
There have been 79 IPOs priced this year, up 229.2% from last year, per renaissancecapital. Total proceeds raised were $41.4 billion this year, up 512.4% from last year. About 110 IPOs were filed this year, marking an increase of 233.3% from last year.
There have been 276 SPAC IPOs this year, with healthcare taking almost half the total volume, followed by technology (24% weight). The recent resurgence in blank check and Special Purchase Acquisition Companies (SPAC) has been one of the main reasons for the rally in IPO ETFs.
The COVID-19 situation has made the Blank Check route more appealing for going public as virtual road shows are less effective. The route is also less complicated and pricey.
A Sneak Peek at 2021’s IPOs
Globally a record $162.4 billion has been raised by more than 600 issuers in 2021 this year, the most ever at this point in the year, data compiled by Bloomberg revealed, with special-purpose acquisition companies making up half of the proceeds. In comparison, just $37 billion was raised in the year-ago quarter, as quoted on Economic Times. Cheaper valuation and upbeat markets have been driving this euphoria.
Especially, Europe has been witnessing deals after two years of muted activity. Amazon-backed Deliveroo – the food delivery app and the pandemic winner – looks at valuation of up to $12 billion in its London IPO. Vodafone Group also seeks $3.1 billion from Vantage Towers IPO.
Among the recently priced U.S. IPOs, Viant Technology (DSP) (up 139%), ZIM Shipping (ZIM) (up 78.5%), Bolt Biotherapeutics (BOLT) (up 67%), Bumble (BMBL) (up 59%), loanDepot (LDI) (up 48.1%), Sun Country Airlines (SNCY) (up 46.9%) and Instil Bio (TIL) (up 34%) are some of the hot IPOs that have seen a huge surge in returns from IPO this year.
What Lies Ahead?
The IPO pipeline is still solid. Still, the upbeat trend is losing impetus asmarkets are wavering on rising rate worries and the apparent demise of pandemic winners – growth stocks. An index that tracks SPAC listings has fallen about 17% from a February high, on bubble fears in that corner of the market. Though the SPAC euphoria is still alive and kicking as evident from WeWork’s latest intention to go public via the SPAC route, we expect the winning Q1 momentum to lose somewhat in Q2.
“Demand for IPOs remains high, although as yields rise it is possible that some of the lofty valuations may need to be revisited,” said Lewis Grant, a senior portfolio manager at the international business of Federated Hermes. Still, “truly disruptive companies with a unique offering, particularly with a sustainable edge, are likely to find demand for their offering regardless of the wider market,” the Bloomberg article indicated.
On a positive note, the IPO market now has stepped into various other sectors apart from technology from where it has received the main traction so far. On a flip side, the SEC is planning to take stringent stance toward blank-check companies. Bankers expect the SPAC craze to hit foreign shores more, though only a handful of blank-check firms have listed in Europe and Asia so far, per the Bloomberg article.
Against this backdrop, investors can bet on the following ETFs.
Defiance NextGen SPAC IPO ETF
The underlying Indxx SPAC & NextGen IPO Index of the fund SPAK tracks the performance of the common stock of newly listed Special Purpose Acquisition Companies (SPACs), ex-warrants, and IPOs derived from Acquisition Companies over the preceding 36 months.
An 80% weighting is attached to IPO companies derived from SPACs and 20% is allocated to the common stocks of newly listed Special Purpose Acquisition Companies. The fund charges 45 bps in fees.
Renaissance IPO ETF (IPO - Free Report)
The underlying Renaissance IPO Index is a portfolio of newly U.S.-listed IPOs of companies whose unseasoned equities are under-represented in core U.S. equity indices. Notably, IPOs that meet liquidity & operational screens are included on the index at the end of the fifth day of trading, or upon quarterly reviews, weighted by tradable float, capped at 10% and removed after two years. The fund charges 60 bps in fees (read: Rivian IPO Prospect Opens Opportunities for These ETFs).
Renaissance International IPO ETF (IPOS - Free Report)
The underlying Renaissance International IPO Index is a stock market index based upon a portfolio of non-U.S.-listed newly public companies, prior to their inclusion in global core equity portfolios. The fund charges 80 bps in fees. China (38.5%), Japan (11.3%) and United Kingdom (6.0%) are the top three geographies of the fund. The fund charges 80 bps in fees.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free>>