PwC quarterly IPO survey

Stars align for second quarter rebound in IPO market

The market for initial public offerings (IPOs) in Canada bounced back in the second quarter with an impressive $2.1 billion total raised on the TSX, the quarterly PwC survey of Canadian equity markets revealed.

Five new issues on the TSX each raised proceeds of $100 million or greater, including the $1.4 billion PrairieSky Royalty Ltd. issue, and reversed the nearly flat line of the chart from the first quarter of the year. The PrairieSky issue was the largest single placement since the $1.3 billion Athabasca Oil Sands Corp. (Athabasca Oil) issue of 2010.

The second quarter performance was up from the $3.8 million raised on the TSX Venture in the first quarter of the year, which saw no activity on the TSX.

The change in fortune for the IPO market in the quarter suggests a window has opened for new equity issues from quality companies from across industries, says Dean Braunsteiner, national IPO services leader at PwC.

“The stars have aligned for companies with sound businesses and a good story to tell,” says Braunsteiner. “The quarter sent us a clear signal: There is growing optimism in the market, there is the expectation of reasonable economic growth and there are investors seeking opportunities in companies with both growth potential and established revenues. The window is open for companies ready to take advantage of this market.

“The variety of sectors giving us IPOs in the quarter speaks to the generally positive climate,” adds Braunsteiner. “New issues from the oil and gas sector, the manufacturing and technology sectors and from financial services suggest investors are looking across the spectrum for good opportunities.

The improvement of IPO activity on the TSX failed to drag the TSX Venture out of its slump. There was only one new issue on the TSX Venture exchange in the second quarter of 2014 and just two IPOs in the first quarter — a sign that junior mining companies continue to struggle to attract investment in a period of commodity price volatility.

Total proceeds for the first six months of this year reached more than $2.1 billion from nine IPOs on all exchanges in Canada vs $1.3 billion from 17 new issues in the first half of 2013. The second quarter of 2014 is the largest since the second quarter of 2010, which recorded 16 IPOs worth $2.4 billion. Over the past decade, 2010 holds the record for the largest IPOs from January to June with a total of 32 issues at a value of $2.9 billion.

PwC has conducted its survey of the IPO market in Canada for more than 10 years. The reports are issued on a quarterly basis to provide information to the corporate sector, investors, the media and others that will help them put the market into better perspective. For the purposes of the survey, investment vehicles such as structured products are not considered IPOs because they do not represent new equity raised for operating companies.