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Non-traditional routes for companies looking to be listed on the market such as reverse merger and direct listings* remained popular among technology, media and telecom (TMT) companies in 2021, according to GlobalData. The leading data and analytics company notes that 117 companies opted for a reverse merger in the period, while at least 15 companies chose to use the direct listing route.
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“Reverse and direct listings are cheaper and faster alternatives to traditional initial public offerings (IPOs). For TMT companies, a popular example of a reverse listing is to merge with special-purpose acquisition companies (SPACs)—a company that has no commercial operations.,” says Swati Verma, Associate Project Manager for the Thematic Team at GlobalData.
GlobalData’s latest thematic report, ‘Thematic Research: TMT IPO Themes’, reveals that SPAC merger mania was high in 2021. At least 117 TMT companies combined with SPACs to go public in the year, raising a total of $67.1 billion. Compared to 2020, reverse merger listings increased more than four-fold in 2021. Some of the biggest reverse merger listings in the TMT space in 2021 were electric vehicle (EV) manufacturer Lucid Motors, food delivery and ride sharing provider Grab, and personal finance company SoFi.
Verma continues: “Grab, an ecommerce player, came out of the pandemic and merged with Altimeter Growth to gain a listing in Nasdaq at a valuation of $40 billion, the largest for any SPAC merger IPO. Grab is diversifying to become a super app. It has successfully ventured into offerings such as digital payments, hotel bookings, and insurance services. In addition, it has expanded into eight countries in Southeast Asia”
The trend of direct listings began with Spotify in 2018. There have been 20 direct listings since then, and at least 15 TMT companies took this route in 2021. US exchanges have welcomed TMT companies for direct listings—10 of the top 12 were in the US. Online gaming platform Roblox and cryptocurrency exchange platform Coinbase Global saw the two biggest direct listings in 2021.
Swati adds: “Roblox saw a massive growth in users during the pandemic and went public through a direct listing in 2021. It has attracted several well-known names (including Gucci, Vans, Netflix, BBC, Lego, and Nike) that are looking to take an early position in the metaverse and attract next-generation consumers. Growing brand involvement will expand Roblox’s user base from children to adults, delivering further growth as the metaverse evolves.”
“In 2022, we expect a growing number of TMT companies to shun the traditional IPO process and go public by combining with a SPAC. Notable companies that have announced a SPAC mergers listing include BYJU’S, the world’s biggest edtech company; automotive brand Polestar, Israli social trading brokerage eToro Group, and home ownership company Better.com,” Verma concludes.
* Reverse mergers and direct listings are alternate ways for a company to be listed in the market without going through an IPO process.
