2021 likely to be a good year for IPOs

IPOs to fly in 2021

2020 was a blockbuster year for IPOs. The pandemic hit year saw very few new IPOs in the first half of the year. However, the second half of the year saw a flurry of IPOs coming to the market one after another. The theme sets to continue into 2021 too as it is likely to be a good year for IPOs. There are several fundamentally good companies planning an IPO in 2021.

IPO market in 2020

2020 witnessed several IPOs having a blockbuster opening. IPOs such as Burger King, Mrs. Bector Foods, Mazagon Dock Shipbuilders, Happiest Mind Technologies, and Chemcon Speciality Chemicals were oversubscribed by more than 150 times. 2020 happens to be the first time that as many as five issues were oversubscribed by 150 times.

IPOs such as Burger King, Happiest Minds, Route Mobile, and Chemcon Speciality Chemical managed to more than double investor wealth on their listing. What’s interesting to note here is the wide range of industries these companies operate in, and this suggests that investor appetite is at an all-time high.

The pandemic affected year, 2020 happened to have a silver lining by having the highest average listing gains in the past decade at 35.6%, with 2017 coming in at a distant second with 22.25% average listing gains.

Outlook for 2021

It was expected that December 2020 would be jam-packed with IPOs. However, only Burger King, Mrs. Bector Foods, and Anthony Waste Handling Cell came out with IPOs this month. IPOs that were unable to list in December 2020 would be listed in early 2021. LIC continues to be the most-awaited and largest IPO of 2021 among several others.

Increased liquidity in the market and higher investor risk appetite is set to keep the cash registers ringing and ensure the IPO bull run continues well into 2021. Industries that have been hit hard by the pandemic would take some time to recover, and some thought would have to be put in before applying for their IPO, though they would be good long-term holdings.

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