2022 look ahead: Will the money gusher continue flowing into IPOs, SPACs and deals in the new year?
Money was so free-flowing in 2021 that it sent a loud and clear message to entrepreneurs, investors and companies looking to tap the markets: All aboard the gravy train.
It was a record year for the number of initial stock offerings and the amount of capital raised.
More than 1,000 companies went public in 2021, raising a total of $306 billion, more than the three previous years combined, according to tracking site PitchBook.
Among the notable North Texas IPOs was home health care technology company Signify, which raised $564 million during its stock market debut in February. The IPO initially put a $7 billion valuation on the company. That had declined to about $2.4 billion by year’s end.
In November, Dallas-based biotechnology company Vaxxinity Inc. went public in a deal initially expected to place a $2 billion value on the firm that aims to democratize chronic disease treatments. Its market value was about $800 million by year’s end.
Based on discussions with companies at various stages of growth, IPO activity will likely remain attractive in the new year, said Jason Larkin, a Dallas market president at financial advisory consulting firm Embark.
“We’re still seeing that excitement from companies about the opportunity to access capital,” he said. “Will it be at the same level as ? I’m not sure because it was an incredible record year, but I don’t see a slowdown.”
The surge in capital was partly due to companies seeing the public markets as an opportunity to expand during COVID-19, Larkin said. There was also pent-up demand for companies to go public from pre-pandemic investments.
In the first nine months of 2021, venture capitalists in the U.S. raised a record-setting total of $96 billion across 526 funds. That included a record investment round in recent years for a Dallas-Fort Worth startup.
In May, Irving-based biotech pioneer Caris Life Sciences hauled in “one of the largest capital raises in precision medicine” with an $830 million equity round that included some of the biggest names in investment circles, including Sixth Street and funds associated with T. Rowe Price, Fidelity, Silver Lake and Coatue. It also gave Caris a post-funding valuation of $7.83 billion, according to the company.
A big part of the IPO story of 2021 was the rise in popularity of venture-funded private companies and startups going public through mergers with special acquisition firms. SPACs, as those firms are known, are “blank check” shell corporations designed to take companies public without going through the traditional IPO process.
More than 175 SPAC mergers took place in 2021 with a total deal value of more than $63 billion, PitchBook data showed.
The largest SPAC merger locally involved Irving-based AgileThought, a technology firm that helps businesses become digital, and LIV Capital Acquisition Corp., headquartered in Mexico. They combined in a deal valued at $420 million…
To read the original article from the Dallas Morning News, click here.