[Asia Economy Reporter Yujin Cho] The scale of initial public offerings (IPOs) in the United States has surpassed last year's total amount in just over five months this year.
According to Dealogic on the 15th (local time), as of early June this year, the size of US IPOs (based on offering amount) reached $171 billion (approximately 191 trillion KRW), exceeding last year's annual record of $168 billion.
The sharp increase in IPOs is the result of abundant liquidity in the stock market due to the US government's record monetary policies amid a low interest rate environment. Additionally, the SPAC (Special Purpose Acquisition Company) boom and meme culture among individual investors contributed to driving the market rally.
Foreign media have evaluated that the IPO market boom was led by unlisted companies, which faced funding shortages due to the COVID-19 crisis, entering the stock market through SPACs as a faster way to raise funds compared to traditional IPOs.
Experts predict that the IPO market will peak this summer with a series of major IPOs such as Didi Chuxing and Robinhood lined up. Chinese ride-hailing company Didi Chuxing, scheduled to be listed on the New York Stock Exchange next month, is expected to raise $10 billion, marking the largest IPO this year.
Didi Chuxing's estimated valuation is $100 billion, and if it enters the New York Stock Exchange as planned, it will be the largest Chinese company since the e-commerce firm Alibaba in 2014. As China's largest ride-hailing company, Didi Chuxing holds about 90% of the local market and posted revenue of 42.2 billion yuan and net profit of 5.5 billion yuan in the first quarter of this year.
Morgan Stanley stated, "The US IPO market will experience the hottest summer this year," adding, "This boom is expected to continue into next year." The Wall Street Journal (WSJ) forecasted that the IPO volume from June to August this year will reach $40 billion, enjoying the largest boom in US IPO history.
The stock prices of listed companies are also exceeding their offering prices, boosting investor sentiment. Dealogic reported that the average stock price increase of companies listed on the US stock market this year was 40.5%, nearly double compared to 28.2% in the same period last year and 21.7% in 2019.
According to the US investment banking (IB) industry, the IPO volume is expected to surge to between $250 billion and $300 billion by the end of this year.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
