The record IPO rush could soon dwindle down: After 2021 panned out as the biggest year for IPOs on record, a confluence of factors could be bringing the boom to an end. As central banks around the world scale back stimulus and look to hike interest rates, the surplus liquidity that propelled the record figures raised by companies in their stock market debuts could dry up, leaving markets with a more normalized environment in 2022, analysts told Bloomberg.

How big were IPOs this year? Global initial public offerings so far in 2021 surpassed the USD 600 bn mark last week, making it the biggest year for IPOs in history. Nearly 3k businesses and special purpose acquisition companies (SPACs) worldwide have debuted on stock exchanges so far in 2021. The biggest IPO of the year was credited to Amazon-backed electric vehicle startup Rivian, which raised almost USD 12 bn on the Nasdaq earlier this month.

What’s behind the rise? Post-pandemic economic recovery, unprecedented support from central banks and an aggressive SPAC boom all gave rise to the IPO frenzy, the Wall Street Journal reports. Retail investors have also been cashing in on the high valuations, pushing listing counts and proceeds higher than the previous records posted in 2007 — the year also known for the bust of the dot-com boom, which had given rise to tightened financial regulations and a general fear of the public market, prompting more and more companies to stay private.

But the market has become more attractive: Recent IPO successes, especially in 1Q2021, are encouraging more startups to list, a strong marker that the public market is healthier than previous years. Unicorns like Rivian, India’s Paytm and online brokerage Robinhood, have all gone public as individual investor activity grew — ironically, with many trading through the Robinhood platform itself. SPACs, which offer companies a slightly more flexible path towards going public, also boomed at unprecedented levels at the start of the year, but have largely dwindled for the past few months.

It hasn’t all been sunshine and rainbows though, with half of the year’s large IPOs now trading in the red. The high price valuations coupled with rising interest rates set several IPOs up for disappointment, with Dealogic data showing that 49% of companies in the UK, US, Hong Kong and India — which all raised over USD 1 bn from their IPOs — are trading below their issuance prices. This is well above the 27% of 2020’s big IPOs that were also trading in the red, and 2019’s 33%, raising questions about the valuations produced by underwriters and large investors.

Cases in point: Robinhood’s share price tumbled 10% below its IPO price after going public this summer. The blockbuster IPO of Chinese ride-hailing giant DiDi also faltered soon after its debut following the country’s crackdown on the app, now trading roughly 40% below its initial price. More recently, Paytm’s shares fell 40% on its second day of trading.

Regulatory scrutiny has also been a damper on the SPAC boom: The US securities and exchange commission demanded more information from a number of Wall Street banks about their underwriting activities in the SPAC market and how they’re managing risk after the frenzy began to raise concerns over the due diligence shell companies actually do in order to go public. Several IPOs, including aesthetics device maker Candela Medical and fitness tech company iFit, were postponed in October following the decision, and another SEC warning that could require some SPACs to restate their financial results put the brakes on a number of new offerings, according to WSJ.

The story was not much different here at home: Egypt’s IPO market saw its revival from a two-year drought earlier this year with Taalem’s debut in April and e-Finance’s blockbuster listing a few months later. LSE-listed healthcare player IDH also completed a technical listing, transferring a portion of its shares from London to the EGX in May. But a handful of IPOs have been persistently delayed due to market conditions, and things have been relatively quiet since e-Finance’s moment in the spotlight last month.

But our IPO pipeline looks to be going strong: The state’s privatization program is also beginning to see the light of day, with over five state companies slated for a listing before the end of FY2021-2022. EGX-listed Abu Qir Fertilizers is expected to sell additional shares on the bourse sometime next month. State-owned Ghazl El Mahalla sports club was set to debut in October, but delayed its plans to this month, while cosmetics pharma giant Macro Pharma had been expected to list shares in a secondary sale on the EGX in April. The offering was delayed due to concerns over “the market’s capacity to absorb multiple offerings.” Al Gioshy Steel has also been considering an IPO for over two years, but has been delaying the decision until it sees market indicators improve.

And the entry of SPACs to the Egyptian market could turn things around: The Financial Regulatory Authority’s approval of a proposal led by EGX boss Mohamed Farid to bring SPACs to Egypt sparked within a day announcements of plans to establish blank-check firms and list on the EGX. Allowing SPACs could offer startups a chance to list on the EGX early in their development, boosting the number of IPOs in Egypt, Farid previously said. Regulators have been working to persuade more companies to list on the EGX, most recently amending listing rules to make it easier for larger firms to go public.

So, are we in for a continuation of the global IPO boom in 2022? While some analysts warn that the change in monetary conditions globally will bring an end to the boom, others say the trend is set to continue. Money managers still consider investing in IPOs a key tool to outperform markets, while banks reap massive sums from underwriting fees. But monetary tightening continues to be a headwind for the IPO boom going forward, and wary market watchers warn that a market correction could soon be in the cards.