Midwest IPO Insights Q1 2021

As the US begins to contemplate a post-COVID recovery and business and consumer confidence rises, the capital markets pipeline remains populated with high-quality issuers, which, combined with investor demand, should point to continued strength in capital raising. According to PwC’s Q1 Capital Markets Watch, the US equity capital markets in Q1 2021 kicked off with yet another record driven by the continued SPAC attack, with 389 IPOs raising $125 billion. 

Midwest Market IPOs and proceeds by industry - TTM

• With only three months into the new year, the number of SPAC IPOs has already surpassed that of 2020 with a total of 24 SPAC IPOs raising $7 billion in the Midwest. That is also more than double the number of SPAC IPOs in Q3 2020, when SPACs first started to rise in popularity. Additionally, the market has seen an anticipated increase in SPAC mergers with certain Midwest companies being targeted by SPACs.
• Excluding SPACs, the technology, media, and telecom (TMT) sector dominated the IPO market over the last twelve months in the Midwest, with seven IPOs raising $3.7 billion, including a mega deal which raised over $1.6 billion.

Number of Midwest Market IPOs and proceeds by quarter

• When combining the total proceeds raised from traditional and SPAC IPOs, there was a record amount of capital raised during a single quarter in the Midwest market.
• Across all SPAC transactions, SPACs that completed mergers in Q1 have shown a healthy return of 27%, which outperformed most IPO sector returns. Traditional IPOs returned 15%, solidifying SPAC and IPO returns as outperforming the S&P of 6%.

We expect a strong supply of IPO candidates to contribute to the pipeline, coupled with continued investor appetite, to support IPO markets in 2021. Still, there are questions if the current pace can continue. 

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