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What’s driving a buoyant IPO market as General Atlantic make waves?

In what is turning out to be a bumper year for firms going public, General Atlantic has seen a record number of initial public offerings (IPOs) among companies on its books already in 2021, including the Squarespace [SQSP] IPO.

The New York-based equity firm, founded in 1980, offers capital and strategic support for 145 global growth companies currently in its portfolio, managing over $53bn in funds.

General Atlantic, which is renowned for backing big-tech names including Airbnb [ABNB] and Uber Technologies [UBER], has already had 12 firms in its portfolio complete IPOs in 2021 to date, including the Squarespace IPO by way of a direct listing.

$53billion

Valuation of General Atlantic's managed funds

  

General Atlantic revels in IPO “renaissance”

General Atlantic is “riding the wave of IPOs this year, as a record number of companies across its portfolio made their market debuts”, Bloomberg reported, with more potentially to come later in 2021.

The 12 companies which have completed IPOs so far this year is exactly double its previous annual record of six, which was achieved in both 2019 and 2020. Chairman and CEO, Bill Ford, described it as a “renaissance in the IPO market.”

In June alone, General Atlantic saw five of its stocks launch IPOs, including four in just the last three days of the month: Uruguayan payment company DLocal [DLO] on 2 June, India’s Krishna Institute of Medical Sciences [KIMS] on 28 June, Chinese e-commerce grocer DingDong (Cayman) [DDL] on 29 June, cancer drug developer Hutchmed (China) [HCM] and US biometric security firm Clear Secure [YOU] on 30 June.

 

What’s driving IPOs?

We’ve already seen a string of IPOs this year, with the promise of more to come. So far in 2021, there have been 597 IPOs on the US stock market, which is 457.9% up on the same period last year, when there were 107 IPOs by 11 July, according to stockanalysis.com.

Notable IPOs already launched in 2021 include Dr Martens [DOCS], Bumble [BMBL], Coupang [CPNG], Moonpig [MOON], Deliveroo [ROO], Coinbase [COIN], Oatly [OTLY], and more recently, Didi [DID], Wise [WISE] via a direct listing, and Krispy Kreme [DNUT].

Adding to that list is website-hosting service Squarespace’s IPO, which was backed by investors including General Atlantic, and which went public on the NYSE via a direct listing on 19 May.

“It’s clearly the best IPO market we’ve seen since the late ’90s in terms of volume of activity, the quality of the companies going and the excitement among investors” - Chairman and CEO, Bill Ford

 

According to Ford, “it’s clearly the best IPO market we’ve seen since the late ’90s in terms of volume of activity, the quality of the companies going and the excitement among investors”. Bloomberg reported a record $350bn has been raised via IPOs in the first six months of the year, comfortably ahead of the $282bn recorded over the last six month of 2020.

In fact, global head of technology investing at General Atlantic, Anton Levy, who has served on the board of Squarespace since 2014, expects a robust level of IPO activity over the remaining months of 2021. Levy also believes that tightening regulations on technology giants could benefit startups, potentially offering a further boost to IPO activity. He told Bloomberg that, “whether it’s the US or China, where there’s increasing regulatory scrutiny, that’s actually often good for the startup company … because the competitor is often a large tech player”.

 

Which General Atlantic-backed IPOs are next?

Looking ahead, restaurant chain Torchy’s Tacos and personal-care franchise European Wax Center, both of which are part of General Athletic’s portfolio of companies, are planning to go public via IPO later this year, according to Bloomberg. More IPOs are expected in 2021, including Robinhood, which is set to be one of the year’s most high-profile public listings.

While the financial markets aren’t always predictable, it’s safe to expect several more IPOs to land as we move through the second half of the year.

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