Brazil Handled More IPOs in 2020 Than All of Europe

RIO DE JANEIRO, BRAZIL – The economy in 2020 was marked, in Brazil and worldwide, by the surprising performance of the stock markets, which rebounded strongly from the hit of the pandemic.

American stock markets reached record highs from mid-year onwards. Even Brazil’s IBOVESPA broke new intraday historical records over the last two trading sessions in 2020, on Tuesday and Wednesday.

The main reason for these surprising results is the excess liquidity granted by governments worldwide, through aggressive fiscal and monetary policies to counter the impacts of Covid-19, which included negative basic interest rates.

In this scenario, many companies ran to the stock markets as a means of financing their activities, rather than choosing to borrow money from banks and other sources.

After a complete market disruption soon after the pandemic broke out, the number of IPOs (initial public offerings) exploded worldwide. Companies raised US$300 billion (R$1.5 trillion), according to the data company Refinitiv. It was the best year in history, excluding 2007.

The US registered a record US$159 billion in one year. Technology companies such as Airbnb, DoorDash, Snowflake, and Unity Software were the highlights of the year. China pushed the Asian markets which raised US$73.4 billion.

The mainland result would have exceeded US$100 billion had the Ant Group, of billionaire Jack Ma, not been prevented from operating by Chinese regulators. This would have been the largest IPO in history, estimated at US$37 billion.

Without the Ant Group, the largest IPO in 2020 was the US$4.4 billion Beijing-Shanghai High-Speed Railway, and not Airbnb, as many expected.

The great disappointment was Europe. Emissions in the Old Continent fell 10% compared to 2019 and handled $20.3 billion.

Thus, the B3, Brazil’s prime stock exchange, recorded a better result than all traditional European exchanges combined. According to a survey by Economática, the 28 companies that went public in Brazil in 2020 had, in American currency, the market value of US$37.6 billion added to the day they went public in the B3. This is a strong sign of the domestic market’s maturity.

The value is even more impressive because – due to the impact on the economy in the first semester, the short window of opportunity in the second semester, and the excess of offers in some sectors such as real estate developers – there were 25 IPOs canceled in 2020.

The last of these was Prima Foods, a meat producer owned by João Batista Júnior, the older brother of JBS controllers. The company stopped its process on Monday, December 28th. Most of these offerings should be left for 2021. Analysts believe that around 40 IPOs could take place next year.

Source: Veja