The world’s first public offerings (IPOs) raised a record $ 594 billion in 2021, benefiting from stock rallies but often disappointing investors with their subsequent stock market performance.

Companies ranging from tech start-ups to blank check acquiring companies have flooded the market with offers, capitalizing on investors’ willingness to place speculative bets as interest rates low and economies reopen thanks to COVID-19 vaccines have fueled their risk appetite.

“It was a really euphoric capital market when you put it in the context of new issuance activity, and particularly in the creation of new public companies,” said Andrew Wetenhall, co-head of equity capital markets at the Americas at Morgan Stanley.

Some of those bets have worked. Those who bought the $ 1.2 billion IPO of credit startup Affirm Holdings Inc, backed by PayPal Holdings Inc, in January more than doubled their money, for a 25% return in the ‘S&P 500 Index.

But many IPOs have deteriorated. Shares of Swedish vegan milk maker Oatly Group AB, which raised $ 1.4 billion when it went public in New York in May, are down 53%, while those of UK delivery app Foods Deliveroo Plc, which raised 1.5 billion pounds ($ 2.1 billion) when it went public in London in March, are down 46%.

The Renaissance IPO Index, which tracks the average performance of newly listed U.S. IPOs, is down about 8% for the year, compared to a 25% rise for the S&P 500 Index.

Some bankers have warned that the shares of some of the companies that went public in 2021 are still trading at historically high valuations, even though they took a hit after their IPO. Indeed, many investors were willing to pay top dollar to buy these companies during private fundraising in preparation for their IPOs.

“The problem is that the buyers of these IPOs as well as the aftermarket buyers are making losses,” said Paul Abrahimzadeh, co-head of North American equity markets at Citigroup Inc.

A total of 2,097 IPOs, excluding those of Special Purpose Acquisition Companies (SPACs), raised $ 402 billion in 2021 globally, according to data provider Refinitiv. This was an 81% increase in proceeds and a 51% increase in the number of IPOs from 2020.

Including PSPCs, which are shell companies that typically launch when they have lined up investors, IPO proceeds in 2021 reached $ 594 billion, according to data provider Dealogic.

The biggest industries driving IPO volumes were technology and healthcare. According to Refinitiv, 426 tech IPOs were launched this year and 332 healthcare-related transactions, collectively accounting for nearly 42% of the proceeds of IPOs raised by companies around the world.

Among the biggest deals in 2021 was electric vehicle maker Rivian Automotive Inc, which raised more than $ 12 billion when it debuted in November, making it the largest IPO in the U.S. United since Alibaba Group Holding Ltd in 2014.

Other major players include Chinese online video company Kuaishou Technology, with proceeds of $ 5.4 billion, and Korean e-commerce giant Coupang Inc, which raised $ 4.6 billion.

“It’s been an amazing year for global equity formation – dare I say one that probably won’t be repeated anytime soon,” said James Fleming, Global Co-Head of Equity Markets at Citigroup Inc .

PSPC, which went public primarily in New York City, raised a total of around $ 160 billion this year, representing 28% of the total proceeds raised by IPOs in the United States, according to Refinitiv.

They had a roller coaster ride as investor enthusiasm for them at the start of the year turned into disappointment due to their low returns.

The main SPAC exchange-traded fund, the Defiance Next Gen SPAC Derived ETF, has lost 25% of its value since the start of the year after peaking in February.

“The peak pace of business (SPAC) has never been sustainable and now the market is consolidating. But PSPC is not going to go away, ”said Eddie Molloy, co-head of equity capital markets in the Americas at Morgan Stanley.

The IPO pipeline for Q1 2022 is strong, with social media platform Reddit, transportation tech startup Via, software maker Cohesity and private equity firm TPG filing a request to regulators to go public.

Nonetheless, investment bankers say the recent mixed financial performance of many IPOs means this year’s windfall is unlikely to repeat itself in 2022, especially if the stock markets run out of steam due to inflation and economic downturn. other economic concerns.

There is also a regulatory risk. The U.S. Securities and Exchange Commission has cracked down on Chinese company listings in New York, demanding more disclosures. Rideshare giant Didi Global Inc, which completed its $ 4.4 billion New York IPO in June, has announced it will move its listing to Hong Kong as China pushes many of its companies to go public closer to home.

“I have to think (2022) will be a year of decline in global emission levels,” Fleming said.-Reuters