The $1.6-billion Hydro One Limited IPO helped push the total value of all new issues to $3.9 billion for 2015, compared to $3.4 billion in proceeds in 2014, says PwC’s annual survey. The Hydro One IPO was the only issue on the TSX in Q4, and it dwarfed the $810 million raised in the same quarter of 2014.
Throughout 2015, there was a total of 22 new issues on all Canadian exchanges. But the thirteen IPOs on the TSX accounted for the vast majority of the funds raised in 2015, says PwC.
Last year was remarkable for its diversity of issuers, says Dean Braunsteiner, national IPO leader at PwC in Canada. “Two of the top five new issues of 2015 were from a brand new sector in Canada, [which is composed of] special purpose investment companies,” says Braunsteiner. “Four of the 13 IPOs on the TSX were from that sector. For some time, we’ve seen demand from retail investors to get into a business that had been the domain of private equity, [and] now they have a way.”
Also, the strength and diversity of issues coming from the retail and consumer sectors, and from the tech industry, point to a maturity in those areas and demand from investors, Braunsteiner adds.
Regarding the 2015 Hydro One IPO, Braunsteiner says, “This is the second year in a row where a single blockbuster issue dominated the market, suggesting that the size of the issue isn’t a limiting factor in the Canadian market. Equally important is what Hydro One portends for investors looking to get into the infrastructure arena and for governments selling premium assets.”
What’s interesting is the relatively healthy 2015 IPO total was achieved without significant contribution from the mining or oil and gas sectors, Braunsteiner says. “Just two issues on the TSX Venture made 2015 a very quiet year on what used to be one of our busiest routes to going public.”
Looking into 2016, he’s unsure whether to expect more IPO growth. “We know there’s an appetite for new tech issues, and there are private technology companies looking at going public. But the strength of the U.S. dollar and the allure of NASDAQ will draw some Canadian companies there.”
Braunsteiner also notes that private healthcare companies in Canada may yet look to public markets here to duplicate a trend in the U.S., and that Canadian manufacturers may be tempted to exit private ownership to take advantage of growth opportunities across the border.