An initial public offering, also known as an IPO or a stock market launch, is a pivotal step in the journey of a company. It refers to the debut of a company's stock on a stock exchange and allows external investors to buy shares in the company. Going public can yield high returns for the company itself and its investors, but it can also be a gamble. In fact, the
as those from NASDAQ investments or even SPAC mergers in 2020, but returns were negative in 2021. Additionally, the
China and the U.S. remain the most popular IPO destinations
New York, Shanghai, Hong Kong, and Shenzhen are hubs of IPO activity both in terms of
IPO volume and
the size of IPOs. This can be attributed to the sheer size of the stock exchanges located in these cities, as well as the
density of unicorns - private companies worth at least one billion U.S. dollars - based in the United States and Greater China. Debuting on a stock exchange allows these highly valued companies access to capital to fuel their growth and can also give their early investors a return on their investment. For instance, the majority of
IPOs in the U.S. close above IPO price on their first day of trading.
Emerging IPO markets
Aside from the major IPO markets such as the U.S. and China, there are also up and coming markets such as Brazil and Africa. The
size of IPOs completed on the B3 stock exchange in Brazil jumped in 2020 and has remained high since. Reasons for this include historically low interest rates as well as the growth in the number of startups in Brazil in recent years,
making it the leading hub in Latin America. The
size of IPOs in Africa has also been increasing over the past decade, though IPO proceeds reached their peak in 2017 before declining year-on-year since then.
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