US IPO activity fell 59% in the 2nd quarter as SPACs dried up following a regulatory crackdown

• US IPO activity fell 59% in the second quarter as the SPAC frenzy cooled sharply in the wake of rule changes.
• The number of SPACs plunged 87%, raising just $6.8 billion compared with $92.3 billion in the first quarter.
• However, the IPO market remains strong, with more listings in 2021 so far than in the whole of 2020.

The number of companies listing shares on US exchanges for the first time dropped almost 60% in the second quarter, as the boom in special purpose acquisition companies cooled sharply in the wake of a regulatory crackdown.

Data from FactSet published Wednesday showed that the total number of initial public offerings fell 59% quarter-on-quarter, although they were 128% higher than a year earlier.

The decline was more marked within SPAC IPOs. There were just 39 in the three months to June 30, down 87% from 292 in the previous quarter, financial data company FactSet said.

Overall, IPOs raised $50.9 billion in the second quarter, down 64% on the previous three-month period. Within that, SPAC IPOs brought in just $6.8 billion, compared with $92.3 billion.

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Though IPO volumes slid sharply in the second quarter, 2021 so far has already seen more offerings than 2020, which was itself a bumper year.

Public listings have surged in 2020 and 2021, thanks in part to the huge amounts of fiscal and monetary stimulus supporting the US stock market. FactSet said there had been 582 US IPOs in the first half of 2021, compared with 355 for all of 2020. In 2019, there were 242.

But the numbers have also been driven up sharply by the Wall Street craze for SPACs - blank-check companies that list on the stock market to raise funds to find a target company to merge with.

However, the SPAC boom has slowed sharply since April after the US Securities and Exchange Commission tightened the rules around warrants - sweeteners that allow early investors to purchase shares in the future. The SEC issued guidance that would class warrants as liabilities, rather than equity instruments, making the financial reporting around SPACs more complex.