Volatility slows IPO market recovery in third quarter, PwC survey shows

TORONTO (October 4, 2011) — Unprecedented equity market volatility in the third quarter of 2011 forced both issuers and investors to the sidelines and slowed the nascent recovery in the market for initial public offerings (IPOs) in Canada, the quarterly PwC survey of IPO activity shows.

A total of 20 new issues on all Canadian exchanges in the third quarter generated $537.8 million in new equity, less than half the $1.4 billion generated from 10 IPOs during the same three-month period of 2010, the survey reports. The four new issues on the TSX in the third quarter of this year were responsible for $475 million of the total, down from the $1.39 billion from three IPOs on the senior exchange during the third quarter of 2010.

“With the extreme volatility we’ve seen in the third quarter, it’s been very difficult to time an IPO,” explains Neil Manji, PwC national IPO services leader. “When the market experiences wide swings in short periods, issuers take a step back. There are a number of offerings that are being deferred until some stability returns to the market, and this is consistent with what is happening in the global market for IPOs.”

Low valuations, investor concerns about companies’ exposure to markets outside of North America and the on-going sovereign debt turmoil in Europe have also conspired against the recovery in the Canadian IPO market that had shown some momentum in the second quarter of 2011, Manji adds. The second quarter of the year saw 21 new issues with a value of $1.2 billion, up from 13 issues of new equity valued at less than $200 million in the first quarter.

New issues from the energy and mining sectors in the third quarter brought the total number of IPOs on all Canadian exchanges to 54 with a total value of approximately $2 billion. At the end of September 2010, there were a total of 42 new issues valued at $4.3 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.

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