16 new IPOs to watch in 2021

16 new IPOs to watch in 2021
2020 was a great year for new share listings. Will this year be even better?
David Kimberley
April 26, 2021

Table of contents

At the start of April, Bank of America published data showing equity funds had seen more inflows in the prior five months than they had in the last 12 years.

Make of that what you will but what it shows is there is a massive appetite for stock investing at the moment.

Naturally companies have used this to their advantage by seeking to raise as much money as they possibly can.

In the UK, firms raised £16.3bn on the London Stock Exchange during the first quarter of the year — the highest amount since 2007. 

It was a similar story in the US. Companies there raised $38bn (£27.3bn) via traditional IPOs in the first three months of 2021. 

More astonishing was the rise of SPACs, or special purpose acquisition companies.

SPAC IPOs, which involve a listed shell company acquiring a private business to take it public, managed to raise $87bn (£62.5bn) in the US from January to March. 

 

2021 IPOs so far

That might make it seem as though it’s all been smooth sailing for companies looking to list this year.

The reality is that it’s been a bit of a mixed bag. A lot of companies have performed really well but others have bombed.

Probably the prime example of the latter happening was the Deliveroo IPO

Question marks about the takeaway app’s business model and employment contracts began to hover ominously over the company as it moved towards a listing, with a couple of big investors pulling out of the IPO as well.

Ultimately the firm had a poor first day of trading, which some have claimed will put other investors off UK-listed tech firms. That doesn’t seem entirely fair but time will tell if it’s the right conclusion to have drawn.

Of course, there were also some stand out performers in the markets as well. 

Coinbase, which held a direct listing, saw its share price soar when it started trading on the Nasdaq in April. And in the UK, Dr Martens and Moonpig both held successful IPOs.  

All of this listing activity means many of the big names we thought would go public in 2021 already have. But that doesn’t mean it’s over for the year. There are still plenty of companies looking to IPO in 2021.

 

Investing in IPOs in 2021 

You cannot invest directly in most IPOs. That may sound odd but remember, an IPO is where a firm sells its shares to a group of investors, usually big financial institutions, for a fixed price. 

Those institutions can then go and sell the shares they’ve bought on an exchange, which is when most regular investors can start buying them.

The result is that you can usually buy shares in a company on the same day that a firm is holding its IPO but you aren’t buying them directly from the company. 

SPACs and direct listings work slightly differently and do provide more of an opportunity to get in before the big players do. 

Whichever option a company takes to go public, IPO stocks can be held in an ISA, SIPP or just a regular share dealing account, so there are no limitations on that front for you.

Upcoming UK IPOs to watch

A lot of the IPOs UK investors were hoping to see this year have already taken place. 

Moonpig, Deliveroo and Trustpilot were some of the more well-known companies investors were hoping to buy a chunk of in 2021.

But there are still several companies likely to attract a lot of interest when they go public this year. 

 

BrewDog IPO

Estimated valuation £2bn

Brewer and bar operator BrewDog took off during the microbrewery craze in the mid-2000s.

But since launching in 2007 the firm has managed to become one of the UK’s most successful beer companies.

Prior to the pandemic the firm had revenue of £215m and pre-tax earnings of £17m.

The firm hinted at going public back in 2018 but that ultimately didn’t happen. Now there are rumours the firm is going to try again this year, although nothing has surfaced yet.

 

Wise IPO

Estimated valuation £5bn

London-based Wise, which was named TransferWise until last February, 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 reports indicate it will be valued at approximately £5bn.

 

Babylon IPO

Estimated valuation £2.8bn

UK startup Babylon has been making healthcare technology since 2014. Its main claim to fame is an app that can connect patients with doctors via video chat, as well as providing an automated system that can give you a quick diagnosis.

The firm looks likely to go public this year but it’s not clear where that will happen.

Some reports have suggested the company will list in the US via a SPAC merger but that’s yet to be confirmed. UK authorities have also been making a big push for tech firms to list here, so we shouldn’t rule out the possibility of a Babylon listing in London.

 

Darktrace IPO

Estimated market cap £3.7bn

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 he sold to HP for $11bn in 2011.

That probably won’t deter all prospective investors but it’s still making some of them nervous about Darktrace’s prospects.

 

EG Group IPO

Estimated valuation £10bn

You may not have heard of EG Group but the odds are you’ve contributed to the company’s coffers at some point in your life.

The company, which started out with one site in 2001, is one of the biggest petrol station operators in the UK. 

Aside from fuel, the firm also makes a huge amount of money from selling takeaway food and groceries at its service stations. For example, the firm is the largest KFC franchisee in the UK, with more than 100 locations at its service stations.

EG Group has also branched out into other businesses in the past couple of years. For instance, the firm acquired the upmarket fast food chain Leon this year and purchased supermarket group Asda in 2020.

With revenues of over £20bn per year, the firm is likely to hit a high valuation if it does end up listing. 

Upcoming US IPOs to watch

The US remains the largest economy in the world and so it generally offers access to more funding than any other country.

That’s why we tend to see more big valuations on the other side of the Atlantic and is the main reason lots of IPO investors tend to focus more on New York than London.

Stripe IPO

Estimated valuation $36bn - $70bn

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.

Either way, if a Stripe IPO does happen then you can expect it to be one of the largest of the year.

 

Flipkart IPO

Expected market cap $10bn

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, clothing 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.

 

Instacart IPO

Expected valuation $30bn

Like Ocado in the UK, delivery service Instacart has seen a spike in usage during the pandemic. 

The US firm said 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.

Marqeta IPO

Expected valuation $10bn

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 filed for an IPO in February, with reports indicating it will seek a $10bn valuation. The Californian firm will use the funds to expand its operations across the regions it is active in.

 

ZipRecruiter IPO

Expected valuation $5bn

Job search website ZipRecruiter has filed to go public this year but will do so via a direct listing. The company is following in the footsteps of some big name firms, including Palantir and Coinbase, by selling its shares directly on an exchange.

The company stands a good chance of succeeding when it does so. Last year saw ZipRecruiter net $86m in profit, against revenues of $418m. That followed on from a $6.3m loss the previous year.

If the company can convince investors those levels of profitability are here to stay then there’s a good chance it’ll succeed when its shares are listed.

Tech IPOs 2021

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 what’s left of 2021.

 

Ant Group IPO

Chinese fintech giant Ant Group was supposed to hold its IPO in November of last year. But it was scrapped after company CEO Jack Ma made comments critical of the ruling authorities.

Now the firm is going to have to perform a swath of changes before it can start considering a public offering.

But executives at the company and in the Chinese government have repeatedly made public statements that an IPO remains on the cards. 

It’s hard to see it happening but then it’s also the case that authorities there want tech firms to succeed, so we shouldn’t totally rule it out either.

 

Squarespace IPO

Expected valuation $10bn

Unlike most tech firms in the US, Squarespace is based in New York and not Silicon Valley.

The firm, which lets individuals build their own websites with different templates, is also going public with a direct listing.

Given the enthusiasm we’ve seen so far in 2021 for tech stocks, it wouldn’t be a surprise if the company performs well.

Last year the company netted $610m in revenue and made $31m in profit. That’s not bad but it may mean a $10bn valuation is a bit excessive.

Onfido IPO

Digital identity firm Onfido looked all set to go public at the end of last year. 

Company founder Husayn Kassai wrote a post on the firm’s site last November announcing that he was stepping down as CEO to make way for incomer Mike Tuchen, who would take the firm towards its IPO.

Although most of its staff are in the UK, it seems more likely Onfido will list in the US. 

Tuchen is based in San Francisco and it looks like the company will attempt to focus its efforts on growing in the world’s largest economy.

But there have been no confirmations here, so a UK-listing may still take place.

 

DataBricks IPO 

Expected valuation $28bn

DataBricks started life as a project at Berkeley, a university in California, a decade ago. The students subsequently took the software they’d created and started selling it as a solution for companies to manage their data.

The results were positive. DataBricks now has over 5,000 customers, including famous companies like HSBC, H&M and CVS.

There’s not been a confirmed date for an IPO yet but reports indicate the firm is looking to go public this year with a valuation of around $28bn.

Couchbase IPO

Expected valuation $3bn

Demand for cloud computing was already on the up prior to the pandemic, with companies eager to outsource data storage services to third parties.

The coronavirus has only accelerated that trend. Working from home means more demand for cloud services and businesses like Couchbase have done well as a result.

The company has reportedly filed for an IPO already and is seeking a $3bn valuation. Again, this may be a bit high given it ‘only’ made $100m in revenue last year.

ThoughtSpot IPO

Expected valuation $2bn

ThoughtSpot is another player in the data analytics space. The company’s software is used by firms in a number of sectors to analyse their own businesses or gain insights into the wider market.

Founder and CEO Ajeet Singh has had prior success in the tech space, having launched cloud computing firm Nutanix back in the late 2000s. That company eventually went public at a multi-billion dollar valuation.

Investors in ThoughtSpot will be hoping that feat is repeated again if the company does end up going public later this year.

2021 IPOs - lots ahead

This is just a taste of some of the big names that may go public this year but there will certainly be more. 

Remember to follow our upcoming IPOs section to see who’s going to be next or check our piece on how to buy IPO shares to learn more about the process. 

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 stock market and want some investment tips, then have a look at the Invest Hub. Some pieces that might help you include…

 

We’re always here to help too, so if you have any questions then reach out on the community, via Twitter or using the in-app chat.

Important Information

This should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice.

When you invest, your capital is at risk. The value of your portfolio can go down as well as up and you may get back less than you invest. Past performance is not a reliable indicator of future results.

Eligibility to invest into an ISA and the value of tax savings depends on personal circumstances and all tax rules may change.

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