Sursa foto: BVB
The initial public offerings (IPO – the most popular method of raising capital) on the Bucharest Stock Exchange amounted to 7.9 million euros in the first quarter of the year, with increased interest from companies and investors for listings on the alternative market, AeRO, says Florin Vasilică, leader of the Strategy and Transactions department at EY Romania.
These IPOs were are in sectors such as cybersecurity, construction, and retailers, while the listing of the first Romanian REIT (Real Estate Investment Trust – any company that owns, manages, or finances real estate that generates income) paves the way for legislative changes for this type of investment, which could contribute to the diversification of portfolios, according to Vasilică.
Also, the Ministry of Public Finance continued with another round of sales of government bonds to the population, raising a total amount of 286 million euros. Moreover, the segment of the corporate bond was very lively this quarter, the largest issue of 40 million euros coming from the main player in the Romanian, the agro-industry.
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In the first three months of this year, the local stock market was the first in the region to exceed its pre-2008 crisis levels index, BET, which reached a new historical record.
„The Romanian capital market is becoming more and more visible, two new companies being included in the FTSE Russell indices (Bittnet Systems and TeraPlast). However, a significant step would be taken for state-owned companies to be listed on the exchange, both in terms of greater transparency and good diversification of investments, but especially for the significant contribution that can be made to the state budget.
The most notable event is the listing of UiPath, the first Romanian unicorn, on the New York Stock Exchange, marking a historic moment for the local business environment. This success story confirms that Romanian entrepreneurs have the chance to achieve international recognition with a scalable product of great interest in the current context and with access to financing facilities for rapid development “, says the EY representative.
Global IPO markets set new records in the first quarter of 2021
Attractive market conditions in 2021 generated the best first-quarter results in the last 20 years, globally, both in terms of the number of transactions and the value of raised capital. Along with the intense activity in traditional IPO markets, the initial public offerings through investment vehicle companies (SPACs) set new records in the first quarter, with more transactions and higher revenues than in the whole of 2020. In the global quarter of 2021, there were 430 transactions on the global IPO market, which attracted $ 105.6 billion in capital, representing an increase of 85% and 271%, respectively, compared to the same period last year, according to EY Global IPO Trends quarterly report: Q1 2021.
This intensification of market activity can be attributed to the large volume of liquidity and the new opportunities offered by the COVID-19 pandemic. At the same time, speculative and opportunistic transactions, along with the promotion of investment platforms for individuals among the general public, including the younger generations, have made investments more accessible than ever. In terms of prospects, the attitude of investors remains cautious, amid fears of a foreshadowed market correction. Given these aspects, investors will continue to seek to capitalize on their investments, taking advantage of the availability of liquidity, where it still exists.
In the North and South American region in Q1, 121 transactions took place, generating revenues worth $ 45.2 billion. Overall, stock exchanges in the region recorded the highest number of transactions and the highest accumulated revenues in the last 20 years. The Asia-Pacific region recorded the highest revenues from initial public offerings in the last 20 years, with 200 IPO transactions attracting $ 34.3 billion in capital. After a discreet 2020, EMEIA’s IPO markets came back to life in the first quarter of 2021, resulting in 109 IPO transactions and $ 26.1 billion raised capital.
The technology sector retained its first place in Q1 2021, dominating the ranking both in terms of the number of IPOs (111) and in terms of the value of the transactions ($ 46.1 billion). It was followed by the health sector, where there were 78 IPO transactions and revenues worth $ 14 billion. In third place, depending on the number of transactions, was the industrial sector, where there were 57 transactions that attracted capital worth $ 6.3 billion.
IPO markets in the Americas break records both in terms of number and value of transactions in Q1 2021
IPO activity in the markets of the North and South America region has seen a number of transactions that is more than three times higher compared to the first quarter of 2020, an increase of 218% (121 IPOs), and there reached a recorded-high, unprecedented increase of 446% to $ 45.2 billion. Although the health sector continued to lead the region in terms of the number of transactions in the first quarter, with 44 IPOs (which attracted $ 8.7 billion), the technology sector dominated the capital attracted in the region with 21.4 billion dollars (through 33 transactions).
In the US, transactions carried over from 2020 were recorded in Q1 2021, and issuers benefited from high quotations, mainly for companies in the technology sector, generating 99 IPOs, which attracted total revenues of 41.1 billion dollars. The explosion of IPO activity through SPAC continued in Q1 2021 to levels already surpassing the records broken in 2020. There have already been three times more IPO transactions through SPAC on US stock exchanges than through ordinary means, but the number has also exploded. traditional IPO transactions. In the first three months of this year, 300 IPO transactions were made in the US through SPAC, attracting $ 93.4 billion in capital.
Asia-Pacific IPO markets have defied expectations, maintaining a positive momentum
The Asia-Pacific region started the year with almost half (47%) of global IPO activity in Q1 2021. The region recorded 200 IPO transactions, which attracted $ 34.3 billion in the capital, the highest value of a first quarter in the last 20 years, breaking the previous record of Q1 2010. In terms of activity by sector, technology surpassed all others in both volumes (51) and value ($ 17.7 billion).
China’s positive economic growth was reflected in this dynamic of IPO activity. Despite a new review procedure instituted by the Chinese authorities, the country recorded a 51% increase in the number of transactions (133) and 121% increase in capital attracted ($ 28.9 billion) compared to the same period last year. . And Japan’s IPO activity remained stable, with funds continuing to target high-tech startups, resulting in a strong group of IPO candidates. In total, there were 20 initial public offerings in Japan, which attracted $ 1 billion in capital.
EMEIA IPO market gains momentum, optimism and transactions with unicorn companies in the first quarter
The EMEIA region had a strong start in Q1 2021, influenced by the dynamism of the fourth quarter of last year. Sustained activity in the region can be attributed to high quotations, low volatility, and growing confidence in a possible economic recovery. In total, EMEIA recorded 109 IPO transactions, 179% more than in the same period last year. These transactions attracted $ 26.1 billion in capital, up 646% from the first quarter of 2020.
Europe has maintained its resilience to shocks, despite the restrictions imposed during the pandemic, and has seen an increase in investor confidence. European IPO activity improved in Q1 2021, the number of transactions increased by 315% (83), and their value by 1.814% ($ 23.1 billion). In the United Kingdom, investors maintained their appetite, and companies benefited from the accelerated growth of the pandemic and the high level of liquidity. The United Kingdom ended the quarter with 17 IPOs, raising $ 7.5 billion in capital, an increase of 467% and 1,031%, respectively.
Outlook for Q2 2021: uncertainties could saturate market volatility, triggering the perfect storm
Although the market attitude is in line with a positive trend, uncertainties will continue to be present, generating volatility in the market. The likelihood of new waves of the COVID-19 pandemic worldwide, combined with different global vaccination rates, geopolitical tensions, inflation, interest rates, and the ability of global financial systems to cope with unexpected market shocks are all ingredients for a perfect storm. Whether a company decides to take the path of a traditional initial public offering, a merger through a SPAC, or a direct listing, well-prepared companies with attractive business stories operating in popular sectors should now act to take advantage of the transaction opportunity window as long as it remains open.