It’s a new year and that means there’s going to be lots of new companies to invest in.
Several firms have already listed new shares to buy in the first couple of weeks of the year, with the US and UK IPO markets showing no signs of slowing down.
And there’s more to come, with several big tech IPOs looking set to go live in the months ahead.
So without further ado, here’s a look at some of the upcoming IPOs that we can expect to see in 2021.
One of the craziest things about last year was the disconnect between the pandemic and the vast sums of cash being pumped into the stock market.
You would have thought that lockdowns, a pandemic and all the fear they created would have slowed down the markets.
Instead the US IPO sector had its best year since 2014. More than 200 businesses went public last year, raising a total of $78.2bn — a 69% increase on 2019.
And they performed well too.
The Renaissance U.S. IPO Index, which tracks the US IPO market, was up close to 114% in 2020, a remarkable performance given the circumstances.
There’s a good chance that we’ll see more IPOs in 2021 than we did last year. That holds true for both UK IPOs and US IPOs.
The reason for this is that there is lots of cheap money floating around the economy.
Investors are also lacking many options when it comes to seeing a good return on their investment. Putting money into the stock market is one of the only options available to them, although they might be moving up the risk ladder to get there.
Companies are aware of this and will look to try to build a warchest of cash that they can use to grow or maintain their businesses in the years ahead.
The UK stock market did not have quite the rocketship 2020 that the US had.
Only 23 firms listed in the UK, raising £1.9bn in the process. That’s nothing to sniff at but it’s only a fraction of the amount that was raised over in the US.
But 2021 looks set to change this with lots of new share issues likely to take place in the London IPO market.
That’s in part due to the low-interest rate environment. But it’s also because the UK treasury is looking to encourage more local firms to list in London, not the US.
The UK has also done a good job at quietly fostering a tech industry. There are currently more ‘unicorns’ - firms valued at over £1bn - in the UK, than in France, Germany and the Netherlands combined.
The prospective Deliveroo IPO has captured lots of attention but there are a few other famous faces here that will probably pique lots of interest in the markets.
Deliveroo’s turquoise bags have become a hallmark of city life in the UK since its founding in 2013. That’s been especially true during the pandemic, as we’ve all been forced into ordering in, rather than eating out.
The company looks set to hold its IPO during the first three months of 2021. It's not clear how much it will seek to raise but a recent fundraising round saw the company valued at $7bn. There’s been a lot of scepticism over the firm’s business model, so prospective investors will have been particularly pleased to hear the firm turned an operating profit in part of 2020.
Moonpig is famous for its wholesome TV ads and (occasionally) amusing birthday cards. Along with Cardly and Funky Pigeon, the firm has become one of the largest online greeting card businesses in the UK.
Founded back in 2000 by an ex-commodities trader, the company now also delivers flowers, food and drinks. Moonpig has done particularly well during the pandemic, with demand for its gifting ecommerce services lifted by our inability to meet in person.
Whether investors believe that trend will continue once we’re back to normality will probably determine how successful its IPO is going to be.
Danish firm Trustpilot has emerged as one of the main sources of trust on the internet. The review website makes money by allowing companies to display its reviews and get better insights about their customers.
Operating in what is often a contentious sector has its problems. Trustpilot has been dogged by accusations that it allows fraudsters to game its website and use it as a trust marker to support their activities.
Still, that hasn’t stopped the firm attracting investment from venture capitalists. We’ll see if they can attract similar investment when they go public.
London-based Transferwise is a rare company in the world of start-ups because it has actually managed to turn a profit.
The company, which lets customers transfer money abroad, has spurned previous efforts to hold an IPO but confirmed listing plans at the end of 2020.
It's not clear yet how much the firm is going to raise but the it was valued at £3.7bn in July of last year.
Another player in the fintech space that looks set to hold a UK IPO in 2020 is Pensionbee.
The company only recently announced its plans to go public but said it will probably raise somewhere in the region of £300m.
As its name suggests, the company provides a set of pension fund management and investment services. It has been active since 2014 but it’s not clear if it's profitable.
The US IPO market will be the focus of most investor’s attention in the year ahead.
After a bumper 2020, there seems to be a good chance we’ll see even more money going into new shares in the US during 2021.
The reason for that is simple.
There is lots of money floating around the economy and people are eager to invest it.
Companies may also fear this boom cycle may come to an end and will want to raise money while they can.
And because it attracts lots of money, the US market tends to attract big names. For example it looks like we could see a Stripe IPO and a Roblox IPO in the next 12 months.
After leaving Tinder in 2014, Whitney Wolfe Herd sued the company for sexual harassment. She won nearly $1m from the dating company as a result.
But the media hype created by the case also led Andrey Andreev, the founder of Russia’s largest dating site, to email her. The two would eventually partner together and create Bumble, a dating app that requires women to be the first to send a message if a match is made.
The company now has over 100m users and seems to have had some success at converting them into paying customers.
Dating is a competitive game but, as Match Group shows, it can also be a very profitable one. Investors will likely be eager to put money into Bumble, particularly as there is still lots of room for the company to grow.
Founded by two Irish brothers back in 2010, Stripe has emerged as one of the biggest players in the payments business over the past decade.
The company has also branched out into providing a range of financial services and technology products during that time.
No precise figure has been put on how much the company may raise if it does hold an IPO in 2021.
One valuation from October last year put a price of $36bn on the company. But reports published not long after that suggested the firm valued itself at between $70bn - $100bn, although this didn’t actually provide any indication as to how much the firm would seek to raise in an IPO.
Either way, if a Stripe IPO does happen then you can expect it to be one of the largest in the year.
Flipkart is a bit like the Indian version of Amazon.
The ecommerce site started out selling books but subsequently branched out into selling a whole range of consumer goods, including groceries, fashion items and electronics.
US retail giant Walmart seems to have seen the potential of the company and paid $16bn for an 81% stake in the business back in 2018.
Valuing the company at $40bn, Flipmarket looks set to list 25% of its shares this year, with the goal of raising $10bn. That money will be used to expand and fend off efforts from Amazon to dominate the Indian ecommerce sector.
Like Ocado in the UK, delivery service Instacart has seen a spike in usage during the pandemic.
The US firm said that orders had risen by close to 300% in August of 2020, compared to the same month in 2019.
The company was valued at just over $17bn in the middle of last year but reports indicate its IPO price, which hasn’t yet been set, would put a price tag of $30bn on the company.
Coinbase has emerged as arguably the most famous cryptocurrency exchange in the world, with Binance probably being the only firm drawing in similar customer numbers and trading volume.
Cryptocurrencies have, as you are probably aware, exploded in value again over the past few months. Bitcoin is now trading at record highs and has managed to maintain its high price for substantially longer than it did during the 2017 hype cycle.
A Coinbase IPO is reported to value the company at somewhere in the region of $30bn. No price target has been announced for its shares, so we don’t know yet how much the firm will look to raise.
Goldman Sachs-backed Marqeta lets companies quickly issue debit and credit cards. The firm has seen a big uptick in payments volumes during the pandemic as more people took to using its cards to shop online.
Marteqa has not said how much it will try to raise but reports indicate that it is seeking a $10bn valuation. The Californian firm will use the funds to expand its operations across the regions it is active in.
Tech IPOs are often the big money-makers when there are new share offerings.
But it’s also increasingly hard to separate tech firms from other businesses. After all, almost every business is building some kind of digital offering, so distinguishing between the two can be tricky.
Still, investors like to keep an eye on the more pure play ‘tech’ businesses, so here are some of the big names that might be holding an IPO in 2021.
UiPath is rather unusual in the US tech world because it’s based in New York, not California.
The company makes software that automates certain business processes and is thought to have recurring revenue in the region of $500m.
Like other US IPO rumours, UiPath is likely to go public in 2021 but hasn’t said how much it’s going to try and raise. But reports indicate that the firm is seeking a $20bn valuation.
Chinese fintech giant Ant Group was supposed to hold its IPO in November of last year. But after company CEO Jack Ma made comments critical of the ruling authorities, it was scrapped.
Now the firm is dealing with an antitrust case and there are question marks over whether or not the company might get broken up.
But Ma recently reappeared in public after disappearing for 3 months. If the firm can weather the pressure that the authorities are putting on it then there’s a chance it may try to hold an IPO again.
German company Atotech was supposed to hold its IPO in February of last year.
But the pandemic had other plans for the firm, which makes chemicals used in the production of semiconductors, and it had to delay the share offering.
Now it looks as though the company has decided that it will be trying again this year. Atotech has not said how much it wants to raise and has only put down $100m on regulatory documents as a placeholder.
When it planned on going public last year, the firm was thought to be looking for a $5bn valuation. Given events since then, some reports have suggested it may struggle to do so again. We’ll have to wait and see.
The UK tech industry has long played second-fiddle to the US but that doesn’t mean there are no tech firms operating here. Darktrace is a famous example.
The cybersecurity firm works with some big name businesses in the UK, including William Hill and BT. Its main product is an AI-backed system that is supposed to automatically detect and defend against cyber attacks.
The firm looks likely to be one of the more popular UK IPOs in 2021, raising up to £3.7bn, but it has attracted some controversy.
One of its main backers is Invoke Capital, an investment fund set up by former tech executive Mike Lynch.
Lynch is currently facing securities fraud charges in the US because of claims he had massively overvalued Autonomy, a software company that he sold to HP for $11bn in 2011.
That probably won’t deter most investors but it’s still making some investors nervous about Darktrace’s prospects.
This is just a taste of some of the big names that may go public this year but there will certainly be more.
Our community chat on IPOs is also a good place to visit if you want to keep up to date with what’s going on in this part of the market.
And if you’re new to the whole stock market thing and want some investment tips, then have a look at the Invest Hub. Some pieces that might help you include…
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