In total, companies raised over $167 billion through 454 offerings on U.S. exchanges in 2020, obliterating the former record of $107.9 billion at the height of the dot-com boom in 1999. 

So far in 2021, global IPO listings have topped 430 offerings, raising an astounding $105.6 billion - more than three times the total proceeds from the quarter before. 

The COVID-19 pandemic has played a role in this significant ramping up of market momentum for IPOs, with $67.3 billion raised in the US alone in Q4 of 2020 - a figure that’s around six times the total from the first three months of the year as the world descended into the health crisis. 

The IPO frenzy of 2020 was unexpected, to say the least. When the spread of COVID-19 led to the shutting down of significant facets of global economies and a subsequent drop in the stock market, many IPO watchers will have undoubtedly braced themselves for another disappointing year following on from an underwhelming 2019. 

Instead, investors were treated to unprecedented volumes of IPOs launched around the world, and there’s mounting evidence to suggest that 2020 was only the tip of the iceberg. 

Related content: Benzinga's Full Upcoming and Recent IPOs Calendar

The Rise and Rise of SPACs

IPOs flew out of the traps as 2021 was just beginning, with Nasdaq listing 91 companies with a 76% overall win rate in January alone as more businesses appeared set to bank on an investor-friendly new year market. 

Out of the new listings, 67 were special-purpose acquisition companies (SPACs), while three were switches. New York appears to be a significant part of the SPAC and IPO boom, with the top three IPOs listed in January arriving on Nasdaq as well as seven of the top 10 IPOs by proceeds were also listed on the market. 

Speaking to Bloomberg, Jeff Thomas, Nasdaq’s senior vice president and head of West Coast listings highlighted that SPACs will continue to play a significant role in ramping up the volume of IPOs that we see enter the market in the near future: 

(Image: PwC)

The chart above illustrates the sheer presence that SPACs have afforded themselves on the market. Where there were never more than 27 SPAC-based IPOs coming to market before 2020, Q1 of 2021 has hosted 298 SPAC IPOs alone. 

Why Investors Are Enticed by SPACs

While SPACs used to operate largely outside of the mainstream, they’ve become a lot more commonplace over the past 12 months, and are clearly increasing in popularity each quarter. Let’s take a look at why SPACs have become a market driving force. 

Finally, SEC regulations have become more involved in regulating SPACs, giving them more validation in the world of investing. The SEC has stepped in to set fixed prices for each IPO while regulating voting and redemption rights to aid all parties involved in the process. 

In fact, according to Maxim Manturov, Head of Investment Research at Freedom Finance Europe, the regulatory landscape has decisively changed to favor the flow of investment in IPOs and SPACs in general as a conscious means of boosting the financial landscape in the wake of the COVID-19 pandemic. 

The pandemic supplied additional reasons for the retail investment market to grow. "To support the economy, most countries adopted stimulating policies, which brought both the loan and deposit interest rates to the historic lows,” Manturov explained. “As an alternative to low-rate deposits, many started investing their savings into stock markets, which posted significant gains last year despite the lockdown and the production slump."