IPOs

2021 to be a Record Year for IPOs? ETFs in Focus

The global market for initial public offerings was off to a great start this year and is still running hot.There have been 250 IPOs priced this year, up 190.7% from last year, per renaissancecapital. Total proceeds raised are $89.0 billion, up 232.2% from last year. About 315 IPOs have been filed, marking an increase of 186.4% from last year.

There have been 378 SPAC IPOs this year, with healthcare taking almost half the (42%) total volume, followed by technology (29% weight). Companies are also joining the IPO stream to go public in a stock market at all-time highs.

The rebound in traditional IPO activities has been noticed as the SPAC market has faltered amid heightened regulatory pressure. After a record first quarter, special purpose acquisition company or blank-check companies’ issuance dropped 87% in the second quarter as regulators sped up crackdown efforts, according Barclays data, as quoted on CNBC.

For the year-to-date period, the market is already at a record level in terms of funds raised, and is expected to cross the full-year all-time high of $97 billion raised in 2000 amid the dot-com boom, according to Renaissance, as quoted on CNBC.

At least nine IPOs this year saw their shares doubling from their offering prices. E-Home Household Service, a Chinese housekeeping and home appliance service company, has surged more than 300% since its market debut in May, the CNBC article noted. The article went on to explain that Biotech Verve Therapeutics, ZIM Integrated Shipping, an Israeli container shipping company, as well as dLocal, an online payments firm in emerging markets, are among the top-performing IPOs this year.

What Lies Ahead?

It mostly depends on the bond yields. Demand for IPOs remains high, but if yields rise, it is possible that some of the huge valuations may be corrected. Still, “truly disruptive companies with a unique offering, particularly with a sustainable edge, are likely to find demand for their offering regardless of the wider market,” a Bloomberg article indicated early this year (read: Record Q1 for Global IPOs? ETFs in Focus).

On a positive note, the IPO market has now stepped into various other sectors apart from technology from where it has received the main traction.

Against this backdrop, investors can bet on the following ETFs.

Renaissance IPO ETF IPO

The underlying Renaissance IPO Index is a portfolio of newly U.S.-listed IPOs of companies whose unseasoned equities are under-represented in core U.S. equity indices. Notably, IPOs that meet liquidity & operational screens are included on the index at the end of the fifth day of trading, or upon quarterly reviews, weighted by tradable float, capped at 10% and removed after two years. The fund charges 60 bps in fees.

Renaissance International IPO ETF IPOS

The underlying Renaissance International IPO Index is a stock market index based on a portfolio of non-U.S.-listed newly public companies, prior to their inclusion in global core equity portfolios. The fund charges 80 bps in fees. China (44.4%), Germany (8.3%) and United Kingdom (7.9%) are the top three geographies of the fund. The fund charges 80 bps in fees.

Defiance Next Gen SPAC Derived ETF (SPAK)

The underlying Indxx SPAC & NextGen IPO Index tracks the performance of the U.S.-listed common stock of Special Purpose Acquisitions Corporations and companies derived from it. The fund charges 45 bps in fees.


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Renaissance IPO ETF (IPO): ETF Research Reports

Renaissance International IPO ETF (IPOS): ETF Research Reports

Defiance Next Gen SPAC Derived ETF (SPAK): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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