Investors are set to witness a record-breaking initial public offering (IPO) bonanza. 2021 is already the busiest IPO market since the dot com bubble of 2000. This coming fall will set a new record. We expect between 90 and 110 IPOs in the last quarter of the year, which would put us on track for 375 IPOs in 2021, raising $125 billion in total. So far, IPO deals have raised $96.4 billion. This year is set to blow 2000 out of the water by both deal count and capital raised. According to a piece by CNBC, the IPOs coming up are exceptional because of their volume and the range of household names on offer.
You can expect to see the prescription eyeglass firm, Warby Parker, make a direct listing, an increasingly favored route to public markets. The fresh food grocer, Fresh Market, will go the traditional IPO route. The brand licensor, Authentic Brands, and the sustainable footwear manufacturer, Allbirds, will also list through IPO.
There is a possibility that other household consumer brands will file for IPO and debut on public markets this year. The rumors are most substantial around the grocery delivery firm, instacart; the Greek yogurt maker, Chobani; the fast-casual salad restaurant chain, Sweetgreen; Walmart spinout, and India’s largest e-commerce firm, Flipkart; and plant-based meat products manufacturer, Impossible Foods. Although Instacart is rumored to be contemplating an IPO, they are also looking into the possibility of a direct listing.
Several tech firms are also rumored to be contemplating a fall IPO, namely, payments processors Toast and Stripe.
Cryptocurrency is one of the most important markets of our time, and firms such as Stronghold Digital Mining have filed to go public later this year.
There are rumors that global asset manager, TPG, and regional airline Republic Airways will also go public.
The electric vehicle (EV) market has been growing and it’s no surprise to hear that there’s at least one EV maker that may be listing this fall: Rivian Automotive.
Special purpose acquisition companies, or SPACs, have gained a great deal of attention this year. 415 SPACs have raised $109 billion this year. There are 310 SPACs set to raise more than $70 billion this fall. Unfortunately for SPAC believers, their declining rates of return have cooled the enthusiasm around them. Furthermore, greater regulatory scrutiny has made investors cautious about investing in them. This can be explained in terms of asset growth effects; high rates of return, especially in large markets, attract competition, as new entrants seek to earn the same returns as incumbents. The flood of new entrants drives returns down, often to the point where rates of return are near or even below the cost of capital. As a result, the very attractiveness of the market becomes its downfall. It’s not surprising then that the surge in SPACs has led to a decline in returns. This doesn’t mean that you can’t find any good SPACs; it just means that as a class, their performance isn’t likely to be very good this fall. It’s a bit like websites. In the beginning, gaining attention for a website was easy, and the returns were insane, simply because they were so few. Today, with billions or even trillions of websites and web pages, you need the top SEO services to stand out and earn a return on your investment.