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.
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.
The History of Interest Rates Over 670 Years
Interest rates sit near generational lows — is this the new normal, or has it been the trend all along? We show a history of interest rates in this graphic.
The History of Interest Rates Over 670 Years
Today, we live in a low-interest-rate environment, where the cost of borrowing for governments and institutions is lower than the historical average. It is easy to see that interest rates are at generational lows, but did you know that they are also at 670-year lows?
This week’s chart outlines the interest rates attached to loans dating back to the 1350s. Take a look at the diminishing history of the cost of debt—money has never been cheaper for governments to borrow than it is today.
The Birth of an Investing Class
Trade brought many good ideas to Europe, while helping spur the Renaissance and the development of the money economy.
Key European ports and trading nations, such as the Republic of Genoa or the Netherlands during the Renaissance period, help provide a good indication of the cost of borrowing in the early history of interest rates.
The Republic of Genoa: 4-5 year Lending Rate
Genoa became a junior associate of the Spanish Empire, with Genovese bankers financing many of the Spanish crown’s foreign endeavors.
Genovese bankers provided the Spanish royal family with credit and regular income. The Spanish crown also converted unreliable shipments of New World silver into capital for further ventures through bankers in Genoa.
Dutch Perpetual Bonds
A perpetual bond is a bond with no maturity date. Investors can treat this type of bond as an equity, not as debt. Issuers pay a coupon on perpetual bonds forever, and do not have to redeem the principal—much like the dividend from a blue-chip company.
By 1640, there was so much confidence in Holland’s public debt, that it made the refinancing of outstanding debt with a much lower interest rate of 5% possible.
Dutch provincial and municipal borrowers issued three types of debt:
- Promissory notes (Obligatiën): Short-term debt, in the form of bearer bonds, that was readily negotiable
- Redeemable bonds (Losrenten): Paid an annual interest to the holder, whose name appeared in a public-debt ledger until the loan was paid off
- Life annuities (Lijfrenten): Paid interest during the life of the buyer, where death cancels the principal
Unlike other countries where private bankers issued public debt, Holland dealt directly with prospective bondholders. They issued many bonds of small coupons that attracted small savers, like craftsmen and often women.
Rule Britannia: British Consols
In 1752, the British government converted all its outstanding debt into one bond, the Consolidated 3.5% Annuities, in order to reduce the interest rate it paid. Five years later, the annual interest rate on the stock dropped to 3%, adjusting the stock as Consolidated 3% Annuities.
The coupon rate remained at 3% until 1888, when the finance minister converted the Consolidated 3% Annuities, along with Reduced 3% Annuities (1752) and New 3% Annuities (1855), into a new bond─the 2.75% Consolidated Stock. The interest rate was further reduced to 2.5% in 1903.
Interest rates briefly went back up in 1927 when Winston Churchill issued a new government stock, the 4% Consols, as a partial refinancing of WWI war bonds.
American Ascendancy: The U.S. Treasury Notes
The United States Congress passed an act in 1870 authorizing three separate consol issues with redemption privileges after 10, 15, and 30 years. This was the beginning of what became known as Treasury Bills, the modern benchmark for interest rates.
The Great Inflation of the 1970s
In the 1970s, the global stock market was a mess. Over an 18-month period, the market lost 40% of its value. For close to a decade, few people wanted to invest in public markets. Economic growth was weak, resulting in double-digit unemployment rates.
The low interest policies of the Federal Reserve in the early ‘70s encouraged full employment, but also caused high inflation. Under new leadership, the central bank would later reverse its policies, raising interest rates to 20% in an effort to reset capitalism and encourage investment.
Looking Forward: Cheap Money
Since then, interest rates set by government debt have been rapidly declining, while the global economy has rapidly expanded. Further, financial crises have driven interest rates to just above zero in order to spur spending and investment.
It is clear that the arc of lending bends towards ever-decreasing interest rates, but how low can they go?
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