$1 billion surge redeems 2012 Canadian IPO market: PwC survey

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TORONTO, January 3, 2013– A $1.3 billion surge of new equity issues in the fourth quarter helped turn around the 2012 Canadian IPO market and raises hopes for growth in 2013, the annual survey of Canadian equity markets by PwC has revealed.

Nine new issues on the TSX in the last three months of 2012 helped power the final quarter of the year to a total of $1.3 billion in new equity, according to the PwC survey. There were 23 IPOs on all Canadian exchanges during the period, compared to 10 new issues worth just $52 million in the last quarter of 2011.

After a very slow start to the year, the strong fourth quarter leaves 2012 with a total of 62 IPOs on all exchanges, delivering $1.8 billion in new equity for the year. There were 61 IPOs on Canadian exchanges in all of 2011 for a total of $2 billion.

The fourth quarter of 2012 was notable for the diversity of new issues as well as for the size of the total proceeds, says Dean Braunsteiner, PwC national IPO services leader.

“We’re used to the mining sector playing an important role in the Canadian IPO market, but the miners shared the spotlight in the last quarter with the consumer products, retail, energy and real estate sectors,” explains Braunsteiner. “The results of the last quarter not only speak to the pent-up demand for equity capital, they are a testament to the underlying strength of the larger Canadian economy.”

“We went from a disappointing start to a reasonable outcome in 12 months,” says Braunsteiner. “We didn’t set any records, but it’s gratifying when you consider where we’ve been.”

Braunsteiner points to the fourth quarter of 2012 – the strongest quarter since the second quarter of 2011 – and the backlog of IPOs still in the pipeline as the foundation for a good start to 2013. “We’ve seen a lot of IPOs in the development stage, across numerous sectors,” he reports.

Despite the optimism at the close of 2012 it’s not all clear sailing, Braunsteiner cautions. “The usual caveats still apply. Issues left unresolved by the ‘fiscal cliff’ negotiations in the U.S. will continue to hang over that market, and we are far from a resolution of the debt crisis in Europe. Caution is still the watchword,” he adds.

Only 12 new issues made it to the TSX in 2012 for a total of $1.7 billion, the PwC survey showed. In 2011, 15 IPOs debuted on the TSX with a value of just less than $1.8 billion. The TSX Venture hosted 44 IPOs in 2012 with proceeds totaling $107 million, compared to 45 new issues worth $214 million in 2011.

The $365 million IPO of retailer Hudson’s Bay Company in the fourth quarter was the largest of the year. The $301 million raised by mining company Ivanplats Limited was the second largest and the biggest new offering of the year from the minerals sector, also in the fourth quarter. Argent Energy Trust raised $212 million in the third quarter, the largest IPO from the energy sector.

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.

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