A resilient stock market, fueled by central bank and government stimulus, is pushing a record number of companies to raise money by offering shares on public markets. That’s been a huge boon for the Wall Street banks orchestrating the deals.
“I honestly thought last year would be the busiest in a couple of decades,” Aloke Gupte, JPMorgan’s co-head of equity capital markets for Europe, the Middle East and Africa, told me. “This year has topped that by a distance.”
What’s happening: In the third quarter, which wraps up Thursday, 94 US initial public offerings, or IPOs, raised $27 billion. That makes it the best July-to-September period by deal count since 2000, according to a report from investment bank Renaissance Capital.
Globally, 2,044 new listings have brought in roughly $468 billion year-to-date, per Dealogic data compiled for CNN Business. That’s already surpassed a record-setting 2020, when 1,656 deals raised almost $358 billion.
The third quarter includes the typically slower summer period, when trading volume eases and bankers take vacations. Activity did taper off in August, but the overall calendar has been extremely full.
Healthcare and tech were the most active sectors, generating two-thirds of the quarter’s US IPOs, Renaissance Capital said. It also noted an uptick in consumer companies going public, including drive-thru coffee chain Dutch Bros., Swiss shoe brand On and grill-maker Weber.
Remember: This was also the quarter that brought Robinhood to the Nasdaq. The trading app raised $2.1 billion — less than it expected, but still a hefty sum.
Gupte pointed to a number of factors driving the recent boom, including the economic recovery, which has lifted stocks, and strong valuations across sectors.
This helps, too: Companies tapping public markets have seen shares perform well in early trading, with many enjoying huge day-one pops — an important marker both for the firms making their debuts and the banks who help price shares.
Stock in eyeglass startup Warby Parker, which started trading on the New York Stock Exchange Wednesday following a direct listing (which is slightly different from an IPO) ended the day 36% above its $40 reference price.
Why it matters: Gupte said that the success of recent IPOs is encouraging companies to go public earlier in their lifetime — a meaningful shift from recent years, when many startups have opted to stay private longer.
And while he thinks next year could be rockier, with smaller windows of activity, he doesn’t expect market volatility to derail the momentum, with a long list of deals in the pipeline.
“Every single time the market’s fallen back, it’s come back and [reached] a new high,” Gupte said. “A very, very high class of companies are lining up to go public.”
On the radar: The Financial Times reports that the recent deal frenzy in the United States and Europe hasn’t extended to Hong Kong, which is set for its worst quarter for new listings since early 2020. The biggest factor is Beijing’s crackdown on private business, which is making companies nervous about listing in the region.
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