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In 2020, a soaring IPO market not only rebounded from the Covid-19 pandemic that nearly killed it, but also posted its busiest year since 1999. Initial public offerings arent taking much of a holiday breather, with some deals expected to launch the week of Jan. 4

More than twice as many companies went public this year compared with 2019, while valuations jumped 168%. According to Dealogic, 456 U.S. IPOs raised $167.4 billion as of Dec. 24, compared to $62.5 billion collected by 211 companies for the same period in 2019.

Thats the most new issues produced by the IPO market in 20 years. In 1999, a rousing time for new issues when hundreds of companies sought to tap the public equities markets, 547 offerings collected $107.9 billion, Dealogic said.

The IPO door opened and a flood of activity went through. The outperformance of early offerings in the aftermarket created a huge degree of momentum for others to follow, said Jim Cooney, head of Americas equity capital markets at Bank of America.

The increase in IPOs this year was due to a surging U.S. stock market that powered through Covid-19 volatility and jitters around the U.S. presidential election. Public markets rewarded growth over profitability in 2020, Christina Roupas, a partner and co-chair of capital markets at law firm Winston & Strawn, said. High growth, net-loss companies and other start-ups that never would have been viable IPO candidates in prior years, all of a sudden had investors willing to throw money at them that perhaps would only have been available previously in the private markets and at less desirable valuations, she said.

By far the biggest story of this years IPO market was the success of special purpose acquisitions, or SPACs. There were 248 blank check companies that went public in 2020more than half the number of all IPOs this yearraising $82.3 billion. Thats nearly 50% of the $167.4 billion raised this year by the IPO market.

SPACs also delivered the years biggest offering: Pershing Square Tontine Holdings (ticker: PSTH), a $4 billion so-called blank-check company headed by Bill Ackman, the founder of Pershing Square Capital Management. Investors continue to provide significant capital to a diverse group of sponsors given [that] these offerings are working incredibly well, Cooney said of SPACs. With few exceptions, the majority of clients should be evaluating this opportunity.

The technology sector was quiet during the first half of 2020, but came roaring out of the gate during the last six months of the year. There were 65 tech IPOs this year, valued at $38.7 billion, Dealogic said. Tech also delivered four of the five biggest IPOs this year: Snowflake (SNOW), which raised $3.86 billion; Airbnbs (ABNB) $3.83 billion offering; DoorDashs (DASH) $3.37 billion deal; and Lufax Holding (LU), which raised $2.69 billion.

The other big story in the IPO market? Health care. The sector produced 102 IPOs this year, valued at $24.8 billion, the second most by number and third biggest by value. Much of health cares success was due to the biotech industry, which saw a surge in deals. Three-fourths of health-care IPOs were biotechs, raising $20.1 billion, Dealogic said. Investors, and the public, realized the importance of biotechnology and life science research as companies raced to develop a cure for Covid-19 this year, executives said. Its the golden age of drug discovery and thats been recognized broadly by the investment community, said BofAs Cooney.

Covid-19 buzz helped some biotechs and life sciences surge, delivering three of the top five best performing offerings this year. CureVac (CVAC), a German biotech that develops vaccines for infectious disease, soared nearly 250% in August. Berkeley Lights (BLI), a digital cell biology company, rocketed nearly 198% in July, while Seer (SEER), which develops tools to analyze proteomics, jumped 197.16% earlier this month.

Anything that is going to help solve the current health crisis, anything health-related is in high demand right now, said Chris Malik, a managing director at KeyBanc Capital Markets.

Next year, expect technology and health care IPOs to continue dominating the market and SPACs to remain aggressive, executives said. Several well-known companies are anticipated to go public in 2021 including Marqeta, Bumble, Roblox, Robinhood Markets, Affirm Holdings, Coinbase, Poshmark and Oscar Health.

The IPO market isnt taking much time off. Due to speedy virtual roadshows, management teams can now market their companies to investors through virtual meetings in three to five days, down from the eight to 10 days typically needed for in-person roadshows. We expect the strength and momentum in IPOs to continue in 2021, with numerous clients targeting IPO launches as early as the first week of the year, BofAs Cooney said.

Write to Luisa Beltran at luisa.beltran@dowjones.com

Read more:
This Was the Busiest Year for IPOs Since the Dot-Com Bubble. Expect Another Busy Year in 2021. - Barron's