Dive Brief:

• Companies worldwide raised $101.4 billion in 490 initial public offerings (IPOs) during the fourth quarter of 2020 for a 9% increase in raised capital compared with the final quarter of 2019, according to an EY report. 

• The U.S. IPO market in 2020 was more active than in any year since 2014, in terms of both proceeds and number of deals, with 224 IPOs raising a total of $86.2 billion, EY said.

• The global "IPO market proved to be more resilient than expected in 2020," Paul Go, EY global IPO leader, said in a statement, adding "this momentum should continue well into 2021."

Dive Insight:

U.S. stock markets — and the number of IPOs — rebounded from a pandemic-induced slump last spring after Congress and the Federal Reserve revived the financial system and economy with injections of record liquidity.

The Fed in March cut the benchmark interest rate to near zero and, for the first time, pledged to buy corporate debt. For its part, Congress approved supplemental unemployment insurance and other stimulus payments that by the end of 2020 exceeded $4 trillion. 

Easy money and high government spending will probably continue to stoke the global IPO market, Go said.

"Looking to the first half of 2021, continued fiscal stimulus, abundance of liquidity and optimism in COVID-19 vaccines should sustain IPO momentum," he said. "However, investors should beware of any potential market correction, especially for those companies that have seen their share prices making substantial gains from the market rally in 2020."

The number of global IPOs during October exceeded the tally during any prior October in 20 years, rising to a total of 187 valued at $37.4 billion, EY said.

Many IPO candidates apparently turned to their advantage logistical constraints caused by COVID-19.

"Virtual roadshows have given companies access to a wider pool of investors and have reduced the time and money involved in doing a conventional campaign," Go said.

The NASDAQ and exchanges in Shanghai and Australia hosted the most IPOs during the fourth quarter, with technology and health care the most active sectors worldwide, EY said.

"Post-IPO returns in 2020 remained high compared with 2019, suggesting there could be more speculative investors chasing higher and faster returns, and more retail investors trading on the stock market," according to the EY report.