US equity markets soar despite COVID-19 and economic headwinds
US capital markets powered ahead during the third quarter, reaching record highs amid the continued spread of COVID-19 and other economic uncertainties. US IPOs raised a record $58.1 billion in the third quarter from 152 companies. The IPO window remained open for private companies looking to transition into the record-setting public markets. The average IPO returned 46%, while the average one-day pop was 43% across all IPOs — more than double the same quarter last year, signaling continued investor appetite for IPOs in a capital-rich environment.
We expect the market to finish 2020 on a strong note, as interest rates remain low and the economy potentially embarks on a path to recovery in the months ahead. While the US presidential election will likely trigger more volatility in the markets, demand for traditional IPOs, SPACs and debt will likely continue to drive US equity markets through 2020.
Two NYSE direct listings took place this quarter with a combined first day closing market cap of $20bn, with an additional NASDAQ direct listing to start off Q4.
“IPOs and follow-on activity returned to the US markets in strength as issuers and investors adapt to working under a COVID environment”
Please note: IPOs with deal values that are less than $25 million, best efforts offerings, oil and gas royalty trusts, business development companies, pricing on OTC Bulletin Board and OTC Pink Sheets are excluded from the above narrative. Debt issuances in the above analysis are US marketplace tranches, denominated in US dollars, and exclude collective instruments (Source: Refinitiv). IPO returns exclude SPAC IPOs. All data is as of September 30, 2020.
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