Against a backdrop of political and public health drama, the number of U.S. initial public offerings (IPOs) in 2020 hit its highest level this century.
Not since the heady days of the dot-com bubble have so many private companies gone public, according to a count from London-based comparison site Trading Platforms, which found U.S. IPOs rose 109% between 2019 and 2020, from 195 to 407.
In fact, that number is more than seven times higher than the 57 IPOs in 2008 during the Great Recession.
Health and tech drive IPO boom
Some of the biggest companies to go public in 2020 included:
- DoorDash, which raised about $3.4 billion in December
- Airbnb, which raised about $3.5 billion the same month
However, these big names in food delivery and lodging were just the tip of the iceberg — and not representative of the overall IPO groundswell.
Much of the IPO boom was driven by health — particularly biotech — and tech companies focusing on health awareness.
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One sizable health care IPO came from GoodRxHoldings, which offers prescription drug comparison tools. The company raised more than $1.1 billion in September. Meanwhile, 3-D development platform Unity Software went public for $1.3 billion the same month.
In addition to being unevenly concentrated in health and tech, the IPO wave also was uneven throughout the year. During the first few months of 2020, companies were slow to go public, but that changed by the third quarter as IPO activity rose rapidly.
IPO outlook in 2021: Even better?
Yes, the IPO outlook for 2021 may be even better than 2020’s strong performance. In December, the U.S. Securities and Exchange Commission (SEC) approved a change to make it easier for companies to raise capital via direct listings.
Direct listings let a business go public without having to go through the traditional IPO process involving underwriters. Instead, the new public company can sell shares directly to investors.
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The new year is already off to a jack-rabbit start. Investment advisor Renaissance Capital reported that last month was the busiest January for U.S. IPOs, with the largest number of billion-dollar IPOs for any month. And 16 IPOs were scheduled in the first week of February, the most for any week since 2006, according to Renaissance Capital.