IPO activity broke a 20-year record in the 3rd quarter as firms rushed to get deals done before Fed tapering, EY says

• Global IPO activity surged to its highest in two decades during the third quarter of 2021, data from Ernst & Young showed.
• That's as companies rushed to raise capital before the Fed could taper its asset purchases in the fourth quarter.
• A key driver was the rebound of IPO markets in Europe, the Middle East, India, and Africa.
• Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Global IPO activity surged to its highest level in two decades during the third quarter, as companies rushed to raise capital before the Federal Reserve tapers its asset purchases later this year, data from Ernst & Young showed Thursday.

The third quarter of the year saw 18% more deals than the third quarter record in 2007, according to EY. This quarter also saw 11% higher proceeds than the last record-setting third quarter in 2020.

In total, 547 IPOs raised $106.3 billion in the third quarter alone, EY data revealed. Year-to-date, 1,635 firms have gone public thus far – raising $330.7 billion in total – far surpassing the 2020 figure in both deal numbers and proceeds.

A key driver was the rebound of IPO markets in Europe, the Middle East, India, and Africa with 476 IPOs raising $73.7 billion year-to-date, EY said, a 263% and 313% increase respectively. But the pause in the boom of blank-check IPOs during the second quarter also spilled over in the third, EY added.

Over in the Asia-Pacific region, the region continued to be active despite some signs of slowdown due to geopolitical tensions in the region. In the third quarter, 750 IPOs raised $123.4 billion since the beginning of 2021. Greater China made up a the biggest chunk of the IPOs (444) followed by Japan at a far second (81).

In the Americas, the market has picked up the pace, with 409 IPOs raising US$1336 billion. The level of SPAC activity cooled compared to the first quarter's breakneck speed as the space continues to face regulatory headwinds. Still, going public via a SPAC continues to be an attractive option for many companies, EY said.

In terms of sectors, companies in the field of technology once again dominated the list. For the fifth consecutive quarter since the third quarter of 2020, companies in this field generated the highest year-to-date number of deals, EY said. Healthcare and industrials sectors followed.

"As we head into the last quarter and market uncertainties and volatility continue to intensify, it is important to be well prepared, consider alternatives to the traditional IPO route and be realistic on valuation to ensure success," said Paul Go, EY Global IPO Leader, in a statement.

Still, the firm said it expects a steady pipeline of deals to continue notwithstanding political tensions, inflation risks, tapering by the US central bank, as well as new variants of COVID-19.

Serious IPO candidates, EY noted, should look to "prepare themselves as early as possible and be ready to launch quickly," if needed.