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Get ready for a possibly record-breaking rush of IPOs this fall

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Exterior view of the New York Stock Exchange and Wall Street on June 2, 2021.

Kena Betancur | VIEW press | Corbis News | Getty Images

The IPO pipeline this fall is filling up quickly.

The IPO market has already had its busiest year since the internet bubble in 2000, and the fall will likely set a record.

Roughly 90 to 110 initial public offerings are expected in the next four months, putting 2021 on track for about 375 deals raising $125 billion, according to a new report from Renaissance Capital.

Should that happen, it would make 2021 the biggest year ever for total capital raised and the busiest year by deal count since the 2000 internet bubble.

A robust fall pipeline

The fall IPO pipeline is not only robust, but it is highlighted by many well-known consumer names.

Consumer IPOs on file
Warby Parker (prescription eyeglass retailer, a direct listing)
Fresh Market (fresh food grocer)
Authentic Brands (brand licenser–Nautica, Eddie Bauer)
Allbirds (sustainable footwear)

Many other consumer brand names have not yet formally filed but have a strong chance of going public this year, including:

Instacart (grocery delivery)
Chobani (Greek yogurt)
Sweetgreen (fast casual salad restaurants)
Flipkart (India’s largest online retailer, a Walmart spinout)
Impossible Foods (plant-based meat products)

Tech firms are also well-represented, including digital payment processor Toast. Mobil payments processor Stripe is also a potential candidate.

Several crypto firms have also filed to go public, including alternative energy crypto miner Stronghold Digital Mining.

Other potential candidates include TPG (a global asset manager) and Republic Airways (a regional airline).

There’s even an electric vehicle maker, Rivian Automotive, a maker of electric trucks/SUVs, that has also reportedly filed to go public.

Direct listings

Direct listings should also provide an alternative route to public markets. So far, only Warby Parker has announced it would go public via a direct listing, but Instacart has also reportedly been exploring a direct listing.

SPACs: Down but not out

Shattering every SPAC record in the book, 415 blank-check companies have raised $109 billion in 2021, with 310 other special purpose acquisition companies currently on file to raise over $70 billion more.

“SPACs in the pipeline will have a harder time raising IPO capital compared to early 2021 because of a broad-based decline in SPAC returns and greater regulatory scrutiny from the SEC,” said Lily McGonagle, IPO data analyst for Renaissance.

Will investors get a better deal than the first half?

While the broad market advanced through the summer, IPO investors were disappointed as many high-flying tech IPOs underperformed when interest rates rose in the first quarter. Others underperformed because initial prices were set high.

The result: After-market performance (the performance after the first day of trading) for IPOs was negative for most of this year. An investor who put money into an IPO after the first day of trading on average lost money.

The Renaissance Capital IPO ETF, a basket of about 60 recent IPOs that tracks after-market performance, was flat for the year at the end of August, versus a 20% gain for the S&P 500.

However, the IPO ETF has rallied in recent weeks. After moving sideways for six months, the IPO ETF has broken out to the highest level since February.

One reason: IPOs that priced in July and August were priced lower, which has led to better performance in the after-market.

“The outperformance of the IPO ETF is a signal of a receptive IPO market for companies lined up to go public in the fall,” said Renaissance Capital’s Kathleen Smith.

Correction: A previous version misspelled the last name of the Eddie Bauer brand.

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Jeff Bezos pledges $1 billion to conservation through Bezos Earth Fund

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Amazon CEO Jeff Bezos announces the co-founding of The Climate Pledge at the National Press Club on September 19, 2019, in Washington.

Paul Morigi | Getty Images | Amazon

Jeff Bezos on Monday pledged to give away $1 billion in grants this year with a focus on conservation efforts.

The pledge comes through the Bezos Earth Fund, which the Amazon founder and chairman started in 2020 to execute his $10 billion commitment to fight climate change. The Bezos Earth Fund has pledged to donate about $1 billion a year to activists, scientists and other groups working to address the globe’s climate crisis, with a goal of spending $10 billion by 2030.

Following this year’s focus on conservation, the fund said that in the coming years it intends to support efforts around landscape restoration and food system transportation.

The latest round of grants will be used to “create, expand, manage and monitor protected and conserved areas,” the Bezos Earth Fund said in a release. To start, the fund plans to focus on Central Africa’s Congo Basin, the tropical Andes region and the tropical Pacific Ocean, all of which are key areas for biodiversity and carbon stocks, or the amount of carbon stored in things such as vegetation, soils and oceans.

“The natural world is not better today than it was 500 years ago, when we enjoyed unspoiled forests, clean rivers and the pristine air of the pre-industrial age,” Bezos said in a statement. “We can and must reverse this anomaly.”

It is not yet known which organizations will receive the grants. The gifts will be prioritized in areas where local communities and Indigenous peoples are a main focus of conservation programs, among other considerations, the Bezos Earth Fund said.

Earlier this month, the fund said it would give away $203.7 million by the end of the year to organizations advancing climate justice, among other causes. That’s after it awarded $791 million in grants last year to 16 organizations, including the World Wildlife Fund, the Natural Resources Defense Council and the Nature Conservancy.

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Net-zero carbon emissions could cost Asia trillions: ING

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An overpass during the rush hour in the north district of Qingdao City, in China’s Shandong province.

Cheunghyo | Moment | Getty Images

Three of Asia’s largest economies will spend an estimated $12 trillion to achieve net-zero carbon emissions in their transport industries, according to Dutch bank ING.

China, Japan and South Korea account for almost two-thirds of all carbon dioxide emissions in Asia-Pacific, and approximately a third of global emissions, said the bank.

Both Japan and South Korea have pledged to achieve net-zero carbon emissions by 2050, and China by 2060. Net-zero emissions refer to removing more greenhouses gases from the atmosphere than produced.

The $12.4 trillion cost estimate is “equivalent to more than 90% of China’s 2020 GDP,” according to Robert Carnell, ING’s Asia-Pacific head of research and author of the report.

It will cover the electricity generating capacity needed by countries to supply new fleets of battery electric vehicles, electrified rail, hydrogen-powered trucks, sustainable aviation fueled planes, and ammonia-burning ships, he wrote.

The $12.4 trillion price tag doesn’t include infrastructure spending to replace existing vehicle fleets, install electric vehicle charging points, or store new fuels in the industry, he noted.

With up to 30% of total energy consumption coming from the transport systems of the three countries, they would need to act fast and adopt sustainable solutions to ensure their goals are within reach, said ING.

If China, Japan and South Korea start their energy transition process today and spread out their efforts over the next 30-40 years, the cost to achieve net-zero carbon emissions in transportation will be manageable, the bank said.

China’s race to net-zero

China is the world’s biggest carbon dioxide emitter and achieving net-zero carbon emissions will cost its transportation sector $11 trillion — or “1.8% of GDP per year through to 2060,” the report said.

Citing the 2020 China Renewable Energy Outlook, ING pointed out that passenger car transport in China will more than double to 450 million by 2050 — from 220 million vehicles in 2018.

China has seen rapid growth in the electric vehicle space, and ING predicts that if the country fully adopts battery plug-in electric vehicles by 2060, the total energy demand from passenger vehicles by 2050 could decrease significantly.

China’s marine industry would require the most investments to achieve net-zero carbon, ING said, adding that the demand for sea freight is estimated to grow to around 120% of today’s levels by 2060.

However, it would be impossible to achieve carbon neutrality without substituting diesel and liquefied natural gas with green ammonia, hence incurring extra cost of $3.7 billion and an additional 433 gigawatts of electricity generating capacity.

Japan and South Korea’s carbon neutral goals

Both Japan and South Korea have set their sights on 2050, and aim to reach their carbon neutral goals by then.

It will cost Japan $1 trillion to transition to a net-zero plan for its transport system, in terms of the electricity generating capacity required, according to ING’s forecast. This accounts for “about 20% of current Japanese GDP” — but that number can fall to “0.6% GDP per annum when spread between now and 2050.”‘

The report said Japan has made little progress in decarbonizing its economy as fossil fuels still make up more than two-thirds of the country’s primary energy supply. In a positive light, this means “Japan has a lot of low-hanging fruit to exploit in the transition process offering the prospect of rapid progress.”

Read more about electric vehicles from CNBC Pro

ING estimated that the total green energy capacity costs for transforming South Korea’s transport sector toward a net-zero carbon future would cost around $400 billion, or 0.6% of today’s GDP per year when spread over the next 30 years.

Although the cost countries will have to spend on transitioning their transportation systems can be “immensely depressing,” it’s important to remember that “all of this spending is going to show up as GDP,” Carnell wrote.

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Investors watch Evergrande stocks; China markets closed

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SINGAPORE — Shares in Asia-Pacific declined in Tuesday morning trade as investors continue to monitor the situation surrounding embattled developer China Evergrande Group.

Japanese stocks declined as they returned to trade following a Monday holiday. The Nikkei 225 dropped 1.61% while the Topix index shed 1.69%.

In Australia, the S&P/ASX 200 dipped 0.14%.

MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.17% lower.

The liquidity crisis over at China Evergrande Group could continue weighing on investor sentiment regionally after the Hang Seng index in Hong Kong was dragged down by more than 3% on Monday.

Markets in mainland China and South Korea are closed on Tuesday for a holiday.

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Overnight stateside, the S&P 500 saw its worst day since May, dropping 1.7% to 4,357.73. The Dow Jones Industrial Average plunged 614.41 points to 33,970.47 while the Nasdaq Composite fell 2.19% to 14,713.90.

Currencies

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 93.239 following its climb late last week from about 92.8.

The Japanese yen traded at 109.43 per dollar, having strengthened yesterday from around 110 against the greenback. The Australian dollar changed hands at $0.7258 as it struggles to recover after declining from above $0.73 last week.

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