As of first half of this year, amount of U.S. IPO (based on amount of public offering) was $350 billion, the highest ever.
According to data compiled by Bloomberg News on the 27th (local time), the U.S. IPO (based on public offering amount) stood at 350 billion dollars as of the first half of this year, the highest record in half-year. This is far more than its previous high of $282 billion in second half of last year.
This IPO boom is due to the U.S. government’s record-breaking monetary policy implementation amid low interest rates, which has enriched liquidity in the stock market. Overheating has continued since the beginning of this year as funds that have lost their way to the stock market have been driven to the stock market due to the continued money-spending trend of covid-19.
In addition, the rapid growth of the non-face-to-face-related market in the wake of Corona 19 led to a surge in stock prices of companies that benefited from it, and even joined meme culture, raising the public sentiment.
IPO Market Boom
The IPO boom is expected to continue in the second half of the year. When large-scale IPOs such as Chinese car-sharing company Didi Chuxing and U.S. stock trading platform Robin Hood are also waiting one after another.
Didi Chuxing, which is set to be listed on the New York Stock Exchange next month. It aims to raise $10 billion. If it enters the New York Stock Exchange as planned, Didi Chuxing is expected to be the largest IPO in the U.S. since Alibaba, an e-commerce company that raised $25 billion by listing in New York in 2014.
Didi Chuxing has more than 90% of the Chinese market since acquiring Miuver’s Chinese division in 2016. Last year, sales decreased and the deficit grew due to the COVID-19 blockade, but it turned to surplus with a net profit of 5.4 billion yuan in the first quarter of this year.
“The IPO market is expected to continue for the next six years,” said Rob Rich, head of the European capital market at Jeffrey Financial Group.
However, the news agency evaluated that the craze for listing SPAC (Enterprise Acquisition Company). Which led the IPO boom in the first quarter of this year, is fading. The share of SPAC listings, which accounted for about half of the total IPO size in the first quarter of this year. It fell to around 30% in the second quarter, down about 13%.
Private investors led the IPO market boom as unlisted companies. They were short of funds due to the covid-19 crisis, entered the stock market through SPAC. It’s as a way to raise funds faster than traditional IPOs.
However, as the U.S. securities authorities are drawing up regulations on SPAC as subprime and marginal companies have entered the stock market with more inflated ransom prices and public offering prices have fallen after listing them.