IPOs had their busiest third quarter in 20 years, although there was a significant decline compared to the first quarter of 2021. In a near-record stock market and with an abundance of dry powder available, the environment for IPOs and capital raising remains supportive, albeit with uncertainties around potential shocks to the US and global economy in the short term. Looking ahead, the IPO market will depend on economic, health and geopolitical conditions to set the pace for the remainder of the year.
The US economy has moderated as the delta variant of COVID-19 spreads, fiscal impulse diminishes and capital and labor supply constraints persist. But while peak growth is likely behind us, we remain positive about the outlook and expect improving health conditions, strong household fundamentals and gradually easing supply constraints to keep growth above trend over the next few quarters. Our baseline expectation now is for real GDP to rise at an annual rate of 5.7% in 2021, with some strength carrying over to next year, and ultimately settling at a long-term trend of around 2%.
“While some uncertainty remains with COVID-19 variants, the combination of rising vaccination rates, increased consumer spending and a resilient economy overall have created a favorable environment for raising capital and considering whether to go public.”
US debt markets raised $622 billion in Q3 2021. We expect the debt markets to continue their roll through the end of 2021, supported by favorable underlying economics such as employment numbers and earnings, with deals funding M&A, leveraged buyout (LBO) transactions and refinancings. At their September meeting, FOMC members announced that they will begin to taper if economic progress continues as anticipated.
Please note: IPOs with deal values that are less than $25 million, best efforts offerings, oil and gas royalty trusts, business development companies, IPOs pricing on OTC Bulletin Board or OTC Pink Sheets are excluded from this narrative. Venture capital data is for US headquartered companies with minimum deal size of $1 million and a minimum pre-money valuation of $5 million. Data from SEC filings and third-party databases as of September 30, 2021.
To create a clear path forward, you need the confidence that comes from working with a team of straight-talking advisors and actionable insights from a team of dedicated professionals. Find out how we can guide you through each step of the readiness assessment process and beyond.
Partner, IPO Services Co-Leader, PwC US
IPO Services Co-Leader, PwC US
Capital Markets Advisory Leader, PwC US
West Coast Capital Markets Advisory Leader, PwC US