IPO market sees improvement in spite of choppy conditions, PwC survey shows

IPO market sees improvement in spite of choppy conditions, PwC survey shows

TORONTO July 6, 2011 — The market for initial public offerings in Canada picked up speed in the second quarter of 2011 but a series of economic uncertainties from Europe, the US and Japan held growth in check, the quarterly PwC survey of IPO activity on Canadian equity exchanges shows.

New issues from the energy and mining sectors helped raise the number of IPOs on Canadian exchanges to 21 with a total value of $1.2 billion in the second quarter, up from the 13 issues of new equity valued at less than $200 million in the first quarter.

That brings the results for the first half of 2011 to 34 IPOs with a value of $1.4 billion, compared to 32 IPOs in the first six months of 2010 with a total value of $2.9 billion, according to the survey.

Neil Manji, PwC national IPO services leader, puts the results in perspective. “Unfortunately, we’re in an environment where there’s a lot of near-term focus on the calamity of the day that has unsettled the market. The European economic crisis, concerns over US growth and the aftermath of the Japanese earthquake are all on investors’ minds,” he says.

“IPOs are still coming to market, with energy and mining driving most of the activity. But we’ve also seen IPOs delayed until things stabilize. Recent performance of some IPOs has also been weak, which hasn’t helped investor sentiment,” Manji adds.

“Longer term, we’ll see more IPOs as we get confirmation of a sound economic footing, and as investors get more comfortable with the market. Canada is still attracting foreign companies in areas like the resource sector, but also in exciting new areas like clean energy and technology,” he concludes.

There were eight IPOs on the TSX in the second quarter of 2011 with a total value of $1.2 billion vs eight issues on the senior exchange worth approximately $2.3 billion in the same period of 2010.

The largest issue of the second quarter was the $500 million IPO of Gibson Energy Inc. on the TSX.

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.

For more information, please visit www.pwc.com/ca/iposurveys