2021 could be a year for IPOs

An IPO (IPO) is one of the main ways of partially or fully monetizing for initial shareholders (founder, venture capitalist, and private equity funds) and funding the future expansion or diversification of startups. or even unicorns.

After the fall / volatility of the H1CY20 stock market amid COVID uncertainty, stock markets around the world are now reaching new lifetime highs almost every few days and weeks, thanks to unprecedented monetary and fiscal stimulus (led by the US Fed and Congress).

So after a lackluster H1CY20 (COVID) there is a deluge of IPOs in H2CY20 and H1CY21, not only in the United States but across the world and the trend could continue until we have a another bearish cycle. In S1CY20, 34 Chinese companies raised around $ 12.5 from the US listing (IPO) against $ 12 billion in 2020, mainly in the 2sd half (mostly tech companies). Over the past decade (2010-20), various Chinese companies have raised nearly $ 80 billion through US IPOs led by Alibaba ($ 25 billion). But a recent Chinese regulatory crackdown on some tech and education companies over various issues may have cooled sentiment as well.

Either way, American startups or even unicorns are now rushing into the capital market with unlimited liquidity to monetize, deleverage, or finance the company’s future growth. Usually such an IPO frenzy is seen in the last boom cycle followed by brief disaster. We are within 10-12 years of a boom-bust cycle (2008 global financial crisis and then 2020 global financial crisis caused by the US subprime crisis and COVID; could the next be in 2030-32 ??) . Nonetheless, in a boom period like the one we are experiencing now, the IPO of a well-known brand or company usually yields phenomenal listing gains, and so investors are scrambling for a stock. Recent IPOs in the United States have come from a variety of industries including technology, retail, FMCG / consumer goods and services, and logistics. In H2CY20, some of the US IPOs are ZoomInfo (database operator ZI-B2B), Snowflake (SNOW-Cloud infra) and Airbnb (ABNB online marketplace for accommodation, guesthouse and travel and visits).

Some of the successful IPOs in H1CY21:

  • Bumble (BMBL), an aggregator of female-led dating apps, jumped over 60% as enrollment grew in February 2021
  • Roblox (RBLX), an online gaming platform, climbed nearly + 54% on a trading day (March 2021)
  • Coursera (COUR), an online education platform and expensive IPO, also jumped by around + 36% on listing day (April 2021)
  • Didi, a Chinese ridesharing app jumped a modest + 29% on a listing day (June 2021) despite a costly assessment and lingering concern over the crackdown by Chinese regulators
  • Robinhood, an online trading platform for retail traders fell more than -10% on a trading day (July 2021) due to concern over costly valuation

Some of the upcoming IPOs for H2CY2021:

  • Authentic Brands Group (ABG), a US retail / brand management company engaged in various brands of clothing, lifestyle, athletics and entertainment; estimated valuation of the IPO of $ 10 billion. ABG has more than 30 brands, 800 global partners and 6,000 stores.
  • The Fresh Market (TFM), chain of delicatessen / fresh products / vegetables / fruits (retailer). This will be their second IPO after being acquired by Apollo Global (an alternative investment fund / AIF) in 2016. In 2016, TFM was unable to compete with big rivals such as Whole Foods and Kroger. Today, following its restructuring, TFM has physical stores in 159 locations in 22 US states. Although TFM has improved its balance sheet, it remains heavily indebted (high debt level). But being a provider of essential goods and services (groceries and food), TFM may be part of a ‘K’ shaped economic recovery after COVID-19.
  • Instacart operates online grocery / food delivery and pickup service aggregators in the United States and Canada. The company has come into the limelight after COVID and subsequent lockdown restrictions, as the public has turned to online shopping, even for essentials. Instacart has a connection with more than 400 retailers in more than 30,000 stores, which equates to a reach of almost 80% of American households and 70% of Canadian households. According to recent fundraising activity, Instacart was valued at around $ 39 billion.
  • Rivian is an electric vehicle (electric adventure vehicle) manufacturer and automotive technology company. Rivian has mainly engaged in SUVs and vans, and is now marketing its products (EV) from the R&D stage and is in the process of delivering two EVs in the personal vehicle segment: a new SUV (R1S) and a pickup truck (R1T). Rivian is also expanding into the commercial vehicle segment by launching commercial electric delivery vans (CEDVs). Amazon, one of its financial partners, gave the company a standing order of 100,000 CEDV. Rivian was founded by a technocrat as a startup and has now grown into a unicorn, raising around $ 8 billion so far. According to recent fundraising activity, Rivian could be valued at around $ 50 billion. Going forward, the CEDV segment could be a game-changer for the company.

At the end of the line :

COVID has changed the business models of many companies and the resulting digital work life will also remain even after COVID as it improves productivity, reduces costs and improves bottom line which is the ultimate goal of the company. Thus, various companies are now scrambling for digital technologies such as CC (cloud computing), AI (artificial intelligence), ML (machine learning) and robotics. In addition, the world will now gradually switch from fossil fuels to green energies (electric, solar, hydrogen, etc.). As a result, tech-related and EV / green energy IPOs are in demand amid extremely bullish investor sentiment supported by easy liquidity (QEternity).

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