The New York Stock Exchange is on track to steal back the crown for US stock market listings from its rival Nasdaq this year after tapping into the booming market for blank cheque companies.
Companies have raised $66bn through listings on NYSE this year compared with $61bn on Nasdaq, according to Dealogic, with nearly two-thirds of the proceeds raised on NYSE coming from special purpose acquisition companies — Spacs — which have become one of the hottest fads on Wall Street.
The two exchanges have attracted a similar number of Spacs, but NYSE has raised twice as much as Nasdaq by landing the larger deals, including the year’s biggest — a $4bn offering from Bill Ackman’s Pershing Square in July.
Spacs raise money in an IPO then hunt for a company to merge with or else hand back capital to investors if they fail to find a target within a set period, typically two years. They have accounted for about half the money raised on US exchanges in 2020, after being just a fraction in previous years.
“NYSE has made a concerted effort in the Spac area,” said Paul Tropp, an attorney at Ropes and Gray, who has advised on some of the year’s biggest deals. “They have clearly grown substantially and that growth is happening at the higher end.”
NYSE’s lead this year comes after Nasdaq edged ahead of its rival bourse last year for the first time since 2012 and just the second since the dotcom crash.
Nasdaq can claim to have outraised its rival when it comes to traditional corporate IPOs. Excluding Spacs, companies raised $40bn on Nasdaq versus $25bn on NYSE.
Nasdaq has won two of the year’s biggest market debuts, the $2.5bn Royalty Pharma IPO and $2.2bn Warner Music listing, and has a third coming up: Airbnb, the accommodation booking group, which plans to sell about $3bn in a December listing.
The IPO data does not include direct listings, where companies list on the stock market but do not raise capital. NYSE attracted the direct listings of Palantir and Asana this year.
In 2017, NYSE tweaked its rules to help attract Spacs, by allowing them to acquire smaller companies, and reduced the initial listing fees it charged them.
“Since NYSE became an option for Spac sponsors it has been very seriously considered — and selected,” said John Tuttle, chief commercial officer for NYSE. “Going back a few years we had an educational effort with banks, lawyers and others about how we now allow this product.”
Nasdaq has led its crosstown foe in Spac listings every year prior to 2020 except for 2008 and in July also eased the financial burdens on Spac sponsors by allowing them to defer listing fees for one year.
“We compete on every single listing,” said Jay Heller, head of capital markets and IPO execution for Nasdaq. “If we don’t win, we will continue to engage with the company and hopefully they will transfer their listing over to Nasdaq.”