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Following a global slowdown in the first half of 2020, IPO activity soared in the second half of the year and has since maintained its upward trend. The number of listings doubled in the third quarter as investors regained confidence following the pandemic’s first contraction. The surge in initial public offerings has remained unabated. Technology and health were the clear winners, but other unexpected areas also prospered as a result of the crisis.
Technology and healthcare are the big winners.
Global IPO capital raising activity reached its highest level in a decade in 2020. According to Baker McKenzie, approximately US$331 billion was raised across 1,591 listings in 2019, a 42 percent rise from the previous year.
The pandemic has had a significant impact on the two industries that have emerged as the most successful: technology and healthcare. There were 257 technology company IPOs this year, raising $55 billion, up 13% from the previous year. Healthcare firms did well as well, with 162 offerings raising US$33 billion.
After 454 offers raised US$167.2 billion on US exchanges, new highs were set. The previous full-year high, according to Dealogic, was US$107.9 in 1999, at the height of the dot-com boom.
The appeal of these industries stems from a worldwide recognition of how important they are to modern living and how important they will remain in the near future. During the pandemic, the world depended greatly on technology, and now it needs healthcare to go back to normal.
Surprisingly, activity funded by financial sponsors remained rather flat. The record-breaking growth was fueled by venture capital investment in technology and healthcare in particular. Companies that went public in 2020 also did extraordinarily well, with share rises of up to 75% reported by Reuters.
Another trend that affected the market in 2020 was the rise of Special Purpose Acquisition Companies (SPACs) in the United States, which resulted in the largest SPAC IPO in history. This trend has continued into 2021, with worldwide IPOs raising US$202.9 billion from 727 listings in Q1, fueled mostly by SPAC IPO activity in the United States.
Technology has long been a popular topic, but the year 2020 was particularly noteworthy. DoorDash and Airbnb, both household names, went public, each raising more than $3 billion. In addition, IT businesses such as Snowflake, Unity Software, and Palantir Technologies Inc. all had a good year after going public. Palantir, for example, had a 301 percent annual return.
Surprisingly, Biotechnology has been successful. Popular
Vaccine companies have been particularly popular, but the biotech industry as a whole has witnessed a spike in investment. Stevanato, which creates glass vials and is seeking a valuation of over US$7 billion, is one of these vaccine-related companies. Biotech and research, on the other hand, have reaped the benefits of the global shift in focus, as people are becoming more conscious of the sector’s importance.
Biotech businesses have been credited with the majority of healthcare’s recent accomplishments. In 2020, 78 biotech businesses went public, a new high and a 77 percent increase over the previous year. The additional investment has resulted in an increase in R&D, which is expected to continue. According to the 2021 Life Sciences CFO Outlook Survey, 69 percent of life sciences companies want to raise their R&D spending.
Bright Minds Biosciences is an excellent example of a startup biotech business using the influx of cash for research and rapid growth. The firm specializes in developing next-generation treatments, and it was lucky to be in the right industry at the right time.
“Bright Minds was created in 2017 on the concept that psychedelic treatments may be enhanced,” says CEO Ian McDonald. We assembled a team of the world’s foremost experts in the sector and set out to develop next-generation medications for big patient populations. We were in a position to help because the treatments on the market and under development were insufficient.”
Although the company had made significant advances, biotechnology is a costly industry. “We have a strong science team with a history of bringing game-changing innovations to market.” We also have a pipeline of best-in-class serotonin drugs in the works, as well as a diverse array of novel chemical substances. All of this, however, takes time and, more crucially, money,” McDonald explained.
“When the pandemic struck, money poured into the biotech industry. Our products aid in the treatment of depression, PTSD, and epilepsy diseases. Our assistance was, and continues to be, in high demand. As a result, we were able to raise $30 million and form agreements with prestigious research universities as well as the National Institutes of Health.”
McDonald is well aware of his good fortune. “We were fortunate to have made progress when the pandemic struck, because we could then use the extra funding to further research.” Bright Minds was able to become a publicly traded business early this year as a result of the increased interest in our industry. The pandemic’s horror has resulted in an infusion of funding. It’s been a trying time, but thanks to a global change in attention to the biotech sector, we’ll be able to speed up the development of our products and research. Clinical trials will commence in the first half of 2022.”
The trend of record-breaking IPOs in technology and healthcare has continued into 2021 and appears to be likely to continue. Despite the fact that it was mostly due to the epidemic, investments in technology, healthcare, biotechnology, and other sectors are expected to help millions of people for many years to come.
One of our external writers wrote the previous article.
It has not been modified and does not represent Benzinga’s perspective.
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