The World’s Largest IPOs Adjusted For Inflation
Billion-dollar initial public offerings (IPOs) are always eyebrow-raising events, and many have already made headlines in 2020.
Following the recent trend of tech IPOs outnumbering and out-hyping the competition, software has led the way. Cloud storage company Snowflake raised $3.4 billion in the largest ever software IPO, while gaming software developer Unity completed an IPO above its target price for a total of $1.3 billion and big data firm Palantir opted for a direct listing for a valuation of $22 billion.
More big names are still on the horizon. DoorDash just completed an above-range IPO and ended up raising $3.37 billion, and Airbnb raised $3.5 billion before shares opened more than 100% above the IPO price. It’s a big recovery for an IPO market that in 2019 saw major IPOs from Uber and Lyft underperform estimates.
But it was the last-minute cancellation of Ant Group’s IPO in November that would have been the largest public offering ever. At $34.5 billion, it would have eclipsed the massive $25.9 billion raised by energy giant Saudi Aramco in 2019.
How would this have stacked up against the world’s largest IPOs in history? We took the 25 largest global IPOs by nominal offering size as tracked by research firm Renaissance Capital, and adjusted them for inflation to October 2020 dollars.
NTT Docomo Tops the (Adjusted) Chart
Unicorn IPOs might be the current flavor in 2020, but they pale in comparison to communication and resource giants.
When adjusted for inflation, the largest ever IPO was Japan’s major mobile phone carrier NTT Docomo. The company went public as NTT Mobile Communications Network for a then-record $18 billion in 1998, which is $28.7 billion when adjusted for inflation to 2020.
|Company||IPO Date||Industry||Deal Size ($B)||Inflation Adjusted ($B)|
|NTT Mobile||Oct 1998||Communication Services||18.1||28.7|
|Saudi Aramco||Dec 2019||Energy||25.6||25.9|
|ENEL SpA||Nov 1999||Utilities||16.5||25.5|
|Alibaba (U.S.)||Sep 2014||Technology||21.8||23.9|
|SoftBank Corp||Dec 2018||Communication Services||21.3||22.1|
|Deutsche Telekom||Nov 1996||Communication Services||13||21.3|
|AIA Group||Oct 2010||Financials||17.8||21.2|
|General Motors||Nov 2010||Consumer Discretionary||15.8||18.8|
|Japan Tobacco Inc.||Oct 1994||Consumer Staples||9.6||16.7|
|AT&T Wireless Group||Apr 2000||Communication Services||10.6||16.1|
|Rosneft Oil Company||Jul 2006||Energy||10.4||13.3|
|Dai-ichi Life||Mar 2010||Financials||11||13.2|
|Kraft Foods||Jun 2001||Consumer Staples||8.7||12.7|
|Agricultural Bank (H.K.)||Jul 2010||Financials||10.4||12.4|
|Bank of China||May 2006||Financials||9.2||11.8|
|France Telecom||Oct 1997||Communication Services||7.3||11.7|
|Alibaba (H.K.)||Nov 2019||Technology||11.2||11.3|
|Electricite De France||Nov 2005||Utilities||8.3||11|
|Agricultural Bank (China)||Jul 2010||Financials||8.9||10.6|
|Hengshi Mining||Nov 2013||Materials||9.3||10.4|
|Japan Airlines||Sep 2012||Industrials||8.5||9.5|
Despite the recent flurry of IPO activity, only two of the largest 10 inflation-adjusted IPOs occurred in the last two years, with second place Saudi Aramco and Japan’s communications and tech conglomerate SoftBank.
Including NTT Docomo, three of the top 10 occurred in the 1990’s. Italy’s energy giant ENEL SpA raised the equivalent of $25.9 billion in 1999, and German communications company Deutsche Telekom raised the equivalent of $21.3 billion in 1996.
Communications services accounted for five of the top 25 IPOs, and four of the top 10. Only the financials were more prominent with six of the top 25.
Final IPO Numbers can Outperform (and Underperform)
One important consideration to make is that the final amount raised by an IPO can vary from the original deal size.
Though they are underwritten by a large financial institution for a set amount at a specific price range, companies often grant underwriters the “greenshoe option” to sell more shares than the original issue amount, usually up to 15% more.
This over-allotment option lets an underwriter capitalize on a strong market by offering more shares at a surging share price (which they cover at the original price). In the opposite case of falling share prices, the underwriter can buy back shares at market rate to stabilize the price and cover their short position.
Many of the largest ever IPOs have managed to capitalize on their much-hyped debuts. Saudi Aramco ended up raising $29.4 billion, almost $4 billion more than its original offering. In similar fashion, Chinese e-commerce giant Alibaba raised $25 billion on an offering of $21.8 billion, and Visa raised $19.7 billion on an offering of $17.9 billion.
Additionally, large corporations can take advantage of market sentiment by going public in multiple equity markets. Alibaba’s $25 billion debut on the New York Stock Exchange in 2014 was followed by a secondary offering on the Hong Kong Stock Exchange in 2019 for $11.2 billion. Likewise, the Agricultural Bank of China listed on both the Hong Kong and Shanghai Stock Exchanges in 2010 for a combined $22.1 billion haul.
More IPOS on the Docket for 2021
With excitement around IPOs bubbling once again, more companies are lining up to become the next big breakthrough on public markets.
2021’s list of IPO candidates include shopping app Wish (which has already filed for an offering), gaming companies Epic Games and Roblox, payment processing firm Stripe and even dating app Bumble.
And Ant Group’s massive potential IPO shadow looms over all, though regulatory overhauls in China might push it back to 2022 and lower the size of the offering.
For now, the list of the world’s largest IPOs looks to be relatively stable. But with social media giant Facebook cracking the Top 10 list in 2012, and SoftBank’s massive IPO in 2018, the next +$10 billion dollar IPO is always around the corner.
How to Avoid Common Mistakes With Mining Stocks (Part 5: Funding Strength)
A mining company’s past projects and funding strength are interlinked. This infographic outlines how a company’s ability to raise capital can determine the fate of a mining stock.
A mining company’s past projects and funding strength are interlinked, and can provide clues as to its potential success.
A good track record can provide better opportunities to raise capital, but the company must still ensure it times its financing with the market, protects its shareholders, and demonstrates value creation from the funding it receives.
Part 5: The Role of Funding Strength
We’ve partnered with Eclipse Gold Mining on an infographic series to show you how to avoid common mistakes when evaluating and investing in mining exploration stocks.
Part 5 of the series highlights six things to keep in mind when analyzing a company’s project history and funding ability.
View all five parts of the series:
- 1. Common mistakes made with the team
- 2. Common mistakes made with the business plan
- 3. Common mistakes with the jurisdiction of the project
- 4. Common mistakes with the project and technical risks
- 5. Common mistakes with raising money
Part 5: Raising Capital and Funding Strength
So what must investors evaluate when it comes to funding strength?
Here are six important areas to cover.
1. Past Project Success: Veteran vs. Recruit
A history of success in mining helps to attract capital from knowledgeable investors. Having an experienced team provides confidence and opens up opportunities to raise additional capital on more favorable terms.
- A team with past experience and success in similar projects
- A history of past projects creating value for shareholders
- A clear understanding of the building blocks of a successful project
A company with successful past projects instills confidence in investors and indicates the company knows how to make future projects successful, as well.
2. Well-balanced Financing: Shareholder Friendly vs. Banker Friendly
Companies need to balance between large investors and protecting retail shareholders. Management with skin in the game ensures they find a balance between serving the interests of both of these unique groups.
- Clear communication with shareholders regarding the company’s financing plans
- High levels of insider ownership ensures management has faith in the company’s direction, and is less likely to make decisions which hurt shareholders
- Share dilution is done in a limited capacity and only when it helps finance new projects that will create more value for shareholders
Mining companies need to find a balance between keeping their current shareholders happy while also offering attractive financing options to attract further investors.
3. A Liquid Stock: Hot Spot vs. Ghost Town
Lack of liquidity in a stock can be a major problem when it comes to attracting investment. It can limit investments from bigger players like funds and savvy investors. Investors prefer liquid stocks that are easily traded, as this allows them to capitalize on market trends.
- A liquid stock ensures shareholders are able to buy and sell shares at their expected price
- More liquid stocks often trade at better valuations than their illiquid counterparts
- High liquidity can help avoid price crashes during times of market instability
Liquidity makes all the difference when it comes to attracting investors and ensuring they’re comfortable holding a company’s stock.
4. Timing the Market: On Time vs. Too Late or Too Early
Raising capital at the wrong time can result in little interest from investors. Companies in tune with market cycles can raise capital to capture rising interest in the commodity they’re mining.
Being On Time:
- Raising capital near the start of a commodity’s bull market can attract interest from speculators looking to capitalize on price trends
- If timed well, the attention around a commodity can attract investors
- Well-timed financing will instill confidence in shareholders, who will be more likely to hold onto their stock
- Raising capital at the right time during bull markets is less expensive for the company and reduces risk for investors
Companies need to time when they raise capital in order to maximize the amount raised.
5. Where is the Money Going? Money Well Spent vs. Well Wasted
How a company spends its money plays a crucial role in whether the company is generating more value or just keeping the lights on. Investors should always try to determine if management is simply in it for a quick buck, or if they truly believe in their projects and the quality of the ore the company is mining.
Money Well Spent:
- Raised capital goes towards expanding projects and operations
- Efficient use of capital can increase revenue and keep shareholders happy with dividend hikes and share buybacks
- By showing tangible results from previous investments, a company can more easily raise capital in the future
Raised capital needs to be allocated wisely in order to support projects and generate value for shareholders.
6. Additional Capital: Back for More vs. Tapped Out
Mining is a capital intensive process, and unless the company has access to a treasure trove, funding is crucial to advancing any project. Companies that demonstrate consistency in their ability to create value at every stage will find it easier to raise capital when it’s necessary.
Back For More:
- Raise more capital when necessary to fund further development on a project
- Able to show the value they generated from previous funding when looking to raise capital a second time
- Attract future shareholders easily by treating current shareholders well
Every mining project requires numerous financings. However, if management proves they spend capital in a way that creates value, investors will likely offer more funding during difficult or unexpected times.
Wealth Creation and Funding Strength
Mining companies that develop significant assets can create massive amounts of wealth, but often the company will not see cash flow for years. This is why it is so important to have funding strength: an ability to raise capital and build value to harvest later.
It is a challenging process to build a mining company, but management that has the ability to treat their shareholders and raise money can see their dreams built.
The 25 Largest Private Equity Firms in One Chart
How big is private equity? We show funds raised by the largest 25 private equity firms over the last five years and their notable investments.
The 25 Largest Private Equity Firms Since 2015
Frequent the business section of your favorite newspaper long enough, and you’ll see mentions of private equity (PE).
Maybe it’s because a struggling company got bought out and taken private, just as Toys “R” Us did in 2005 for $6.6 billion.
Otherwise, it’s likely a mention of a major investment (or payout) that a PE firm scored through venture or growth capital. For example, after Airbnb had to postpone its original plans for a 2020 initial public offering (IPO) in light of the pandemic, the company raised more than $1 billion in PE funding to plan for a new listing later this year.
Yet many people don’t fully understand the size and scope of private equity. To demonstrate the impact of PE, we break down the funds raised by the top 25 firms over the last five years.
How Private Equity Firms Operate
First, we need to differentiate between private equity and other forms of investment.
A PE firm makes investments and provides financial backing to startups and non-public companies (or public companies that are being taken private).
Each firm raises a PE fund by pooling capital from investors, which it then uses to carry out transactions such as leveraged buyouts, venture and growth capital, distressed investments, and mezzanine capital.
Unlike other investment firms such as hedge funds, private equity firms take a direct role in managing their assets. In order to maximize value, that can mean asset stripping, lay-offs, and other significant restructuring.
Traditionally, PE investments are held on a longer-term basis, with the goal of maximizing the target company’s value through an IPO, merger, recapitalization, or sale.
The List: The Most PE Funds Raised in Five Years
So which names should you know in private equity?
Here are the largest 25 private equity firms by their five-year PE fundraising total over the last five years, with data on funds and investments from respective firms and Private Equity International.
They include well-known private equity houses like The Blackstone Group and KKR (Kohlberg Kravis Roberts), as well as investment managers with private equity divisions like BlackRock.
|Rank||Private Equity Firm||5-Year Funds Raised ($B)||Notable Current Investments|
|1||The Blackstone Group||95.95||Refinitiv, Merlin Entertainments|
|2||The Carlyle Group||61.72||ZoomInfo, PPD|
|3||Kohlberg Kravis Roberts & Co.||54.76||Axel Springer SE, Epic Games|
|4||TPG Capital||38.68||Cirque du Soleil, Cushman & Wakefield|
|5||Warburg Pincus||37.59||Airtel, Sundyne|
|6||Neuberger Berman||36.51||Marquee Brands, Telxius|
|7||CVC Capital Partners||35.88||Petco, Premiership Rugby|
|8||EQT Partners||34.46||Dunlop Protective Footwear, SUSE|
|9||Advent International||33.49||Cobham, Serta Simmons Bedding,|
|10||Vista Equity Partners||32.1||Finastra, Mindbody|
|11||Leonard Green & Partners||26.31||Lucky Brand, Signet Jewelers|
|12||Cinven||26.15||Kurt Geiger, Hotelbeds|
|13||Bain Capital||25.74||Virgin Voyages, Canada Goose|
|14||Apollo Global Management||25.42||ADT, Chuck E Cheese's|
|15||Thoma Bravo||25.29||Dynatrace, McAfee|
|16||Insight Partners||22.74||Monday.com, HelloFresh|
|17||BlackRock||22.46||Authentic Brands Group, Qumulo|
|18||General Atlantic||22.42||Airbnb, Vox Media|
|19||Permira||22.21||Dr. Martens, Informatica|
|20||Brookfield Asset Management||21.69||Multiplex, Westinghouse Electric|
|21||EnCap Investments||21.33||Pegasus Resources, Lotus Midstream|
|22||Francisco Partners||19.13||Verifone, GoodRx|
|23||Platinum Equity||18.00||Livingston International, Palace Sports & Entertainment|
|24||Hillhouse Capital Group||17.89||Miniso, Belle International|
|25||Partners Group||17.87||Civica, KinderCare Education|
Most of the world’s top PE firms, including TPG Capital (which invested in Ducati Motorcycles, J. Crew, and Del Monte Foods) and Advent International (an early investor in Lululemon Athletica) are headquartered in the U.S.
In fact, of the largest 25 private equity firms in the last five years, just four are headquartered in Europe (CVC, EQT, Cinven, and Permira) and one in Asia (Hillhouse).
Another name that might be recognizable is Bain Capital, which was co-founded by Utah Senator and former Republican Presidential nominee Mitt Romney and found success with investments in AMC Theatres, Domino’s Pizza, and iHeartMedia.
Famous Private Equity Investments
One of the most surprising things investors discover about private equity is how many large organizations have been funded through the PE world.
More well-known investments include KKR’s $31.1 billion takeover of food and tobacco conglomerate RJR Nabisco in 1989, and Blackstone’s $26 billion buyout of Hilton Hotels Corporation in 2007.
But other well-known companies have been funded, saved, or restructured through private equity. That list includes grocery chain Safeway, fast food chain Burger King, international racing operator Formula One Group, and hotel and casino company Caesars Entertainment (then called Harrah’s Entertainment).
Many other notable investments could soon pay off for private equity. With IPOs back in season, tech companies like Airbnb and Epic Games are ripe for payouts. At the same time, restructuring companies like J. Crew and Chuck E Cheese’s always offers a chance to recapitalize.
With the COVID-19 economic downturn resulting in newly distressed companies and potential takeover targets, expect the private equity world to be very active in the foreseeable future.
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