The IPO pipeline this fall is filling up quickly.
The IPO market has already had its busiest year since the internet bubble in 2000, and the fall will likely set a record.
Roughly 90 to 110 IPOs are expected in the next four months, putting 2021 on track for about 375 deals raising $125 billion, according to a new report from Renaissance Capital.
Should that happen, it would make 2021 the biggest year ever for total capital raised and the busiest year by deal count since the 2000 internet bubble.
A robust Fall pipeline
The fall IPO pipeline is not only robust, but it is highlighted by many well-known consumer names:
Consumer IPOs on file
Warby Parker (prescription eyeglass retailer, a direct listing)
Fresh Market (fresh food grocer)
Authentic Brands (brand licenser–Nautica, Eddie Bower)
Allbirds (sustainable footwear)
Many other well-known consumer brand names have not yet formally filed but have a strong chance of going public this year, including:
Instacart (grocery delivery)
Chobani (Greek yogurt)
Sweetgreen (fast casual salad restaurants)
Flipkart (India’s largest online retailer, a Walmart spinout)
Impossible Foods (plant-based meat products)
Tech firms are also well-represented, including digital payment processor Toast. Mobil payments processor Stripe is also a potential candidate.
Several crypto firms have also filed to go public, including alternative energy crypto miner Stronghold Digital Mining.
Other potential candidates include TPG (a global asset manager) and Republic Airways (a regional airline).
There’s even an electric vehicle maker, Rivian Automotive, a maker of electric trucks/SUVs, that has also reportedly filed to go public.
Direct listings should also provide an alternative route to public markets. So far, only prescription eyeglass manufacturer Warby Parker has announced it would go public via a direct listing, but Instacart has also reportedly been exploring a direct listing as well.
SPACs: down but not out
Shattering every SPAC record in the book, 415 blank-check companies have raised $109 billion in 2021, with another 310 SPACs currently on file to raise over $70 billion more.
“SPACs in the pipeline will have a harder time raising IPO capital compared to early 2021, because of a broad-based decline in SPAC returns and greater regulatory scrutiny from the SEC,” Lily McGonagle, IPO Data Analyst for Renaissance, told me.
Will investors get a better deal than the first half?
While the broad market advanced through the summer, IPO investors were disappointed as many high-flying tech IPOs underperformed when interest rates rose in the first quarter. Others underperformed because initial prices were set high.
The result: after-market performance (the performance after the first day of trading) for IPOs was negative for most of this year. An investor who put money into an IPO after the first day of trading, on average, lost money.
The Renaissance Capital IPO ETF, a basket of about 60 recent IPOs that tracks after-market performance, was flat for the year at the end of August, versus a 20% gain for the S&P 500.
However, the IPO ETF has rallied in recent weeks. After moving sideways for six months, the IPO ETF has broken out to the highest level since February.
One reason: IPOs that priced in July and August were priced lower, which has led to better performance in the after-market.
“The outperformance of the IPO ETF is a signal of a receptive IPO market for companies lined up to go public in the Fall,” Kathleen Smith from Renaissance Capital told me.