For the foreseeable future, the pandemic will determine the course of society, politics and economics, including whether the IPO market’s recovery is sustained. However, the ongoing vaccine rollout, the solid performance across all regions in H2 and a more stable political outlook could augur well for the future of IPOs.
2. Market volatility
The volatility in global equity markets in early 2020 effectively suspended the majority of listings. Since then, however, markets have largely been more stable. Investors have begun to feel more comfortable with the level of risk, and we have seen a swath of high-profile companies come to market.
3. Innovation in the IPO process
The virtual roadshows pioneered by issuers such as JDE Peet's and GVS provide a template for managing successful IPOs even in the most challenging circumstances. The extent to which companies coming to market—and their advisors and investors—are prepared to embrace such innovation will be a key determinant of the health of the IPO market. And even after the pandemic, many issuers will not want to return to the practices of the past.
4. Sustainable thinking
Investors are looking beyond returns, as ESG considerations become more important to their decisions. This is borne out by the 2019 RBC Global Asset Management Responsible Investing Survey, which reveals that 70 percent of institutional investors in Canada, the US and UK apply ESG principles to investment decisions.
5. The appeal of TMT
The resilience of the TMT IPO market—and particularly of technology companies—was a notable feature of 2020. Much-anticipated technology IPOs will continue to cause excitement during 2021, although a sell-off of US tech stocks in September last year may have given investors pause.
6. The year of the SPAC—again?
After SPACs grabbed headlines and broke volume and value records in 2020, investor interest is unlikely to waver. Whether the phenomenon will spread beyond the US remains to be seen. It will also be worth keeping an eye on direct listings. A NYSE rule change, which came into force in December, means that issuers can now raise capital through direct listings, and this could ramp up the market.
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