Nasdaq Inc. is set to beat the New York Stock Exchange in initial public offerings this year, beating its crosstown rival during a record year of capital raised in US public markets.
Nasdaq’s IPO has raised $191 billion as of Friday this year, compared to $109 billion for new listings on the NYSE, according to Dealogic. With only a few weeks left in the Nasdaq’s commanding lead in 2021, this means it could beat the Big Board for the third year in a row.
Advisors to companies holding IPOs say one factor that helped the Nasdaq this year was ESG’s attempt to brand itself as an exchange focused on environmental, social and governance-criteria. The NYSE, meanwhile, was hit by Covid-19 restrictions on its historic trading floor, making it difficult for companies to hold spectacular bell-ringing ceremonies.
For years, the Nasdaq was in the throes of fierce competition from the two exchanges for new listings. During the two decades leading up to 2019, there were only three years in which more money was raised on the Nasdaq than on the NYSE, DeLogic data shows. Two of those years were 1999 and 2000, the peak of the dot-com bubble when buzzy technology companies flocked to the Nasdaq.
In 2021, Nasdaq won the biggest IPO of the year: the $13.7 billion debut of electric-vehicle maker Rivian Automotive Inc. Other Nasdaq IPOs include brokerage Robinhood Markets Inc., dating-app maker Bumble Inc. and donut chain Krispy Kreme Inc. ,
The Nasdaq overtook the NYSE in the fast-growing business of listing special purpose acquisition companies, or SPACs—shell companies that go public to raise cash for mergers and acquisitions. Nasdaq has won 63% of proceeds raised in SPAC IPOs so far in 2021, up from 39% last year, Dealogic data show. That’s about half of the new SPAC’s list of about $300 billion raised in IPOs this year.
A spokesperson for the NYSE said, “It’s been a tremendous year for new listings on the New York Stock Exchange, which makes it our endeavor to welcome and welcome many of the world’s most innovative and well-governed companies to our NYSE community.” sets the second straight record.”
The biggest IPO of the NYSE this year was South Korean e-commerce company Coupang Inc. and Chinese ride-hailing group Didi Global Inc. Didi said last week that it plans to delist its shares in the US and pursue listing in Hong Kong.
According to Dealogic, last year, IPOs raised a total of $168 billion across both exchanges, a record at the time.
It makes little difference to investors whether a stock is listed on the Nasdaq or the NYSE. But this is a big business for the two exchanges.
During the first nine months of this year, Nasdaq earned $282 million from listing fees, while NYSE parent Intercontinental Exchange Inc. earned $356 million. The NYSE generally charges higher listing fees than the Nasdaq; Fees on both exchanges are determined on a sliding scale based on the number of outstanding shares of the company. Attracting new listings could also boost the exchange’s trading and market-data revenues.
To lure companies, the NYSE and Nasdaq offer investor-relations services, such as tools for hosting earnings calls, and marketing packages that include advertising time with various media outlets. In the days of the IPO, the NYSE typically hailed the company with giant banners on the front of its building in lower Manhattan going public, while the Nasdaq would put the company’s logo on its digital billboard in front of Times Square. Is.
Listed on the Nasdaq this year are among several companies to declare themselves “mission-driven” or ESG in their IPO filings. These include sneaker maker Allbirds Inc., clothing-rental company Rent the Runway Inc. and Rivian. Yogurt maker Chobani Inc. said. In a recent regulatory filing that it also plans to list shares on the Times Square Exchange.
A person close to several do-good company IPOs said the Nasdaq made a strong pitch regarding ESG, leading some executives to choose the exchange.
In August, the Securities and Exchange Commission approved changes to Nasdaq’s listing rules aimed at pushing companies to have more gender and racial diversity on their boards. The rule has sparked lawsuits from Republican lawmakers and conservative groups, and Nasdaq officials admit it prompted complaints from some companies. Still, IPO advisors say the rule helped Nasdaq attract companies led by younger management teams focused on ESG goals.
“Nasdaq appears to be more progressive in the area of corporate governance,” said Patrick Healy, CEO of Issuance Network LLC, which advises companies on the choice of listing exchange. The diversity rule is helping them.
The NYSE established an advisory council in 2019 to help its listed companies identify board candidates from diverse groups. But the Big Board has stopped short of mandating greater diversity through its listing rules.
The 229-year-old NYSE operates one of the world’s last stock-exchange trading floors, unlike the Nasdaq, which runs the electronic market. The Big Board has long said that blue-jacketed traders help ensure smooth trading by providing human oversight at critical moments such as IPOs and daily open and close trading.
That argument became harder to argue after last year the pandemic forced the NYSE floor to close for two months. The exchange’s markets ran and functioned smoothly in all-electronic mode. “It’s hard to tell people you need a floor when you haven’t had it for a long time,” Nelson Griggs, president of the Nasdaq Stock Exchange, said in an interview.
A NYSE spokesperson said: “Everyone knows that stocks trade better on the NYSE, and our trading floor is a major reason why.”
Manzil partially reopened in June 2020, and its population is now at about 75% pre-pandemic levels. Restrictions related to COVID-19 are in effect, including a requirement that visitors show proof of vaccination. So when the bells have started ringing again, it has become tough for Big Board to host lavish IPO parties like before the pandemic. It has undermined the edge the NYSE has long enjoyed over the Nasdaq, which rings its bells in a modern, television-studio-like space not far from Times Square.
Not all companies care about the bell. When chip maker GlobalFoundries Inc. was choosing between the Nasdaq and the NYSE, the services the exchanges offered after the IPO were more important than the function, said Sukhi Nagesh, the company’s vice president of corporate development and investor relations.
GlobalFoundries made its debut on the Nasdaq in October. “It is a matter of time,” said Mr. Nagesh. “Many people want to ring the bell on the NYSE, but it’s good to press the button on the Nasdaq too.”
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