The New York Stock Exchange is well on its way to steal the US listing crown from rival Nasdaq this year after entering the booming market for blank check companies.
Companies raised $ 66 billion from listings on the NYSE this year, compared to $ 61 billion on the Nasdaq, according to Dealogic. Almost two-thirds of the revenue on the NYSE comes from specialty acquisition firms – Spacs – which have become one of the hottest fads on Wall Street.
The two exchanges attracted a similar number of Spacs, but the NYSE raised twice as much as Nasdaq by closing the bigger deals, including the biggest of the year – a $ 4 billion offer from Bill Ackman's Pershing Square July.
Spacs raise money on an IPO and then look for a company to merge with investors or return capital to investors if they can't find a target within a set period of time, typically two years. They made up about half of the money raised on US exchanges in 2020, after having been a fraction in previous years.
"The NYSE has made a concerted effort in the Spac area," said Paul Tropp, Ropes and Gray attorney who advised on some of the biggest deals of the year. "They have grown significantly and that growth is at the top end."
The NYSE's lead this year is that Nasdaq was ahead of its rival stock exchange for the first time since 2012 and only for the second time since the dotcom crash.
Nasdaq can claim to have outperformed its rival in traditional corporate IPOs. Without Spacs, companies raised $ 40 billion on the Nasdaq versus $ 25 billion on the NYSE.
Nasdaq has made two of the biggest market debuts of the year, the $ 2.5 billion listing of Royalty Pharma and the $ 2.2 billion listing of Warner Music. A third one is coming up: Airbnb, the accommodation booking group that plans to sell around $ 3 billion in December.
The IPO data does not include direct listings where companies are listed on the stock exchange but do not raise capital. The NYSE attracted direct listings from Palantir and Asana this year.
In 2017, the NYSE adjusted its rules to attract Spacs by allowing smaller companies to acquire, and reduced the initial listing fees they charged.
"Ever since the NYSE became an option for Spac sponsors, it has been very seriously considered – and selected," said John Tuttle, NYSE chief commercial officer. "A few years ago we did an educational work with banks, lawyers and others about how we are going to allow this product."
Nasdaq had its Crosstown adversary in Spac listings every year before 2020, with the exception of 2008, and in July it also eased the financial burden on Spac sponsors by allowing them to defer listing fees for a 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 work with the company and hopefully move their listing to Nasdaq."