Canadian IPO market to see boost in Q4: PwC

By Staff | October 2, 2012 | Last updated on October 2, 2012
2 min read

The market for IPOs may have fallen quiet in the third quarter of 2012, but there are countless new issues waiting for the right opportunity to enter equity markets.

This suggests a flurry of activity in the next few months could yet redeem the lackluster results recorded so far, says a PwC survey.

Read: Canadian IPO market struggles

Just seven new issues with a total value of $271 million were recorded on all Canadian exchanges in the third quarter of 2012, the survey showed. There was a single IPO on the TSX during the period with a value of $212 million.

In contrast, there were 20 new issues on all exchanges during the same period in 2011, with a total value of $537 million. These included four IPOs on the TSX worth $475 million.

In the first three quarters of this year, 39 IPOs were registered on all Canadian exchanges with a total value of $441 million, including three new issues of equity valued at $397 million on the TSX, the survey finds.

Those figures are down from the first three quarters of last year, when all Canadian exchanges registered 54 new equity issues with a value of $1.9 billion.

Read: Help clients get into private equity

But don’t despair just yet, as the slow pace of new issues could all change in Q4. If a few of the current market roadblocks are cleared, business will start to improve, says Dean Braunsteiner, PwC national IPO services leader.

“There are some very significant IPOs in the pipeline that could revive the total IPO market and turn around the year, but it will require the resolution of some thorny issues beyond our borders,” says Braunsteiner.”

Persistent concerns over the debt crisis and current question marks about Spain continue to cast a long shadow in the market, he says, while the slow pace of recovery in the U.S. weighs heavily on many investors.

Although a slide in commodity prices earlier in the quarter has been reversed, the downward trend did temporarily put the brakes on activity in the mining sector. It’s traditionally considered as a driver of Canadian IPO activity.

Read: Market volatility slows mining deals

“What’s encouraging is the size of the IPOs we see coming, and the diverse nature of the issuers,” says Braunsteiner. “When we see issues planned for real estate and renewable energy, for instance, it’s a sign of broader market strength.”

The low-point of the past decade was 2008, when 57 issues generated just $682 million on all exchanges in Canada for the entire year.

In the U.S., the IPO market is also looking forward to a significant boost. U.S. Software company Workday is planning to list the largest technology IPO since Facebook’s failed offering, reports Financial Times.

Read: U.S. IPO market shows signs of hope

The company plans to sell more than 20 million shares for a price between $21 and $24 each. The company, backed by Greylock Partners, has named Morgan Stanley and Goldman Sachs as lead underwriters. staff


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