US IPO Hits Record High of 395 Trillion Won in First Half of the Year

Photo by Bloomberg News

[Asia Economy Reporter Yujin Cho] According to data compiled by Bloomberg News on the 27th (local time), the scale of U.S. initial public offerings (IPOs) in the first half of this year reached $350 billion (approximately 395 trillion won based on the offering price).

This is the highest half-year figure ever recorded, significantly surpassing the previous record of $282 billion in the second half of last year.

The IPO boom is attributed to abundant liquidity in the stock market due to the U.S. government's record monetary policy implementation amid a low-interest-rate environment. Funds, displaced by continuous monetary easing during the COVID-19 pandemic, have flooded into the stock market, leading to overheating since early this year.

Additionally, the rapid growth of non-face-to-face related markets due to the COVID-19 impact has driven sharp rises in the stock prices of beneficiary companies, and the meme culture has further boosted investor sentiment.

The IPO boom is expected to continue in the second half of the year, with major IPOs such as Chinese ride-sharing company Didi Chuxing and U.S. securities trading platform Robinhood lined up.

Didi Chuxing, which is scheduled to be listed on the New York Stock Exchange next month, aims to raise $10 billion. If it enters the New York Stock Exchange as planned, Didi Chuxing is expected to become the largest U.S. IPO since Alibaba, the e-commerce company that raised $25 billion in its 2014 New York listing.

Didi Chuxing acquired Uber's China division in 2016 and holds over 90% market share in the Chinese market. Although its revenue declined and losses increased last year due to COVID-19 lockdowns and other factors, it returned to profitability in the first quarter of this year with a net income of 5.4 billion yuan.

Rob Leach, head of capital markets for Europe at Jeffrey Financial Group, predicted, "The upward trend in the IPO market is expected to continue for the next six years."

However, Bloomberg noted that the SPAC (Special Purpose Acquisition Company) listing craze, which led the IPO boom in the first quarter, is fading. The proportion of SPAC listings, which accounted for about half of the total IPO scale in the first quarter, dropped by approximately 13% in the second quarter to the 30% range.

SPACs led the IPO market boom as unlisted companies facing funding shortages due to the COVID-19 crisis entered the stock market more quickly through SPACs than through traditional IPOs, and individual investors enthusiastically invested in SPACs due to their high capital gains.

However, as unqualified, marginal companies entered the stock market with inflated valuations and the offering prices fell after listing, U.S. securities authorities have begun preparing regulatory measures related to SPACs, causing investor sentiment to cool down.

This content was produced with the assistance of AI translation services.