First quarter IPO market off 85% from year ago, PwC survey shows



    TORONTO, April 4 /CNW/ - Initial Public Offerings (IPOs) trickled onto
Canadian equity markets in the first quarter of 2007, according to the latest
PricewaterhouseCoopers (PwC) survey of IPOs and capital markets, and it could
be a long time before the small and medium sized players that helped drive IPO
activity to record levels in previous years find their way back to the market.
    The PwC survey of IPO activity on the TSX and TSX Venture Exchanges for
the first three months of 2007 showed the total number of new offerings fell
to 20 from 34 in the same period of 2006. Total proceeds for the three month
period were just under $300 million, down 85% from the $2.0 billion of the
same period of 2006.
    There were just five new issues on the TSX in the first quarter with a
value of $191 million-one-tenth of the $1.9 billion in IPO activity on the TSX
in the same three months of 2006 when income trusts dominated activity. In the
first quarter of 2006, 10 new income trusts representing a value of
$1.3 billion reached the market.
    The majority of IPOs in the first quarter were smaller issues on the TSX
Venture exchange, where 13 new issues accounted for almost $90 million in
activity - an unprecedented level nearing 50% of that seen on the TSX.
    "It is the second consecutive quarter of very slow activity, suggesting
that Canadian small cap companies are not looking to enter the public equity
markets any time soon," said Ross Sinclair, national leader of PwC's IPO and
income trust services.
    "The changes we've seen in the environment for new issues, including the
federal government's announcement on income trusts at the end of October have
created uncertainty and confusion. The IPO market in Canada has lost its
momentum and the billions of dollars companies need for financing are going
elsewhere," said Sinclair.
    The IPO market for income trusts took three or four years to gain
momentum and acceptance, Sinclair noted. "That market set the high-water mark
for equity prices. When the government changed the rules, the buyer of those
equities disappeared. It is unrealistic to believe that the 2007 IPO market
will reach levels seen in the past few years without a period of stability and
adjustment.
    "Although it's hard to say to what extent small cap Canadian companies
have gone in search of other means of funding growth and expansion, it's a
pretty safe bet to say that they won't be waiting too much longer on the
sidelines for the IPO market to recover."
    The bleak state of the IPO market is in stark contrast to much of the
rest of the Canadian economy, where the strong performance of equities, low
interest rates, excellent commodity prices and other positive factors paint a
much more upbeat picture.
    Canadian IPO activity on the TSX and TSX Venture exchange reached 116 new
issues worth $5.8 billion in all of 2006, compared to 119 new issues worth
nearly $7 billion in 2005. There were 54 new IPOs with a value of $5.4 billion
on the TSX in 2006 versus 74 offerings worth $6.8 billion in 2005.

    About PricewaterhouseCoopers

    PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance,
tax and advisory services to build public trust and enhance value for its
clients and their stakeholders. More than 140,000 people in 149 countries
across our network share their thinking, experience and solutions to develop
fresh perspectives and practical advice. Now celebrating 100 years of
excellence in Canada, PricewaterhouseCoopers LLP (www.pwc.com/ca) and its
related entities have more than 4,700 partners and staff in offices across the
country.
    "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP, an Ontario
limited liability partnership, or, as the context requires, the
PricewaterhouseCoopers global network or other member firms of the network,
each of which is a separate and independent legal entity.



    
                 PwC Survey of Capital Markets/IPOs in Canada
                          January 2007 - March 2007

    First Quarter Results
    -------------------------------------------------------------------------
                                                        Total        Income
    Quarter   TSX          TSX-V         Other         Market        Trusts
    -------------------------------------------------------------------------
    Mar 07          (5)          (13)           (2)         (20)          (0)
           $191 million $89.2 million $17.8 million $298 million   $0 billion
    -------------------------------------------------------------------------
    Mar 06         (18)          (16)           (3)         (37)         (10)
           $1.9 billion   $44 million  $164 million $2.1 billion $1.3 billion
    -------------------------------------------------------------------------



    Full year comparison
    -------------------------------------------------------------------------
                                                        Total        Income
    Year      TSX          TSX-V         Other         Market        Trusts
    -------------------------------------------------------------------------
    2006           (54)          (55)           (7)        (116)         (24)
           $5.4 billion   $.2 billion   $.2 billion $5.8 billion $3.0 billion
    -------------------------------------------------------------------------
    2005           (74)          (45)                      (119)         (40)
           $6.8 billion  $180 million               $7.0 billion $5.0 billion
    -------------------------------------------------------------------------



    Top 5 IPOs (M $ Canadian) - First Quarter 2007

    -------------------------------------------------------------------------
    Name                                         Value     Sector
    -------------------------------------------------------------------------
    Universal Energy Group Ltd.                  $125      Energy & Utilities
    -------------------------------------------------------------------------
    Detour Gold Corporation                       $35      Mining
    -------------------------------------------------------------------------
    South American Silver Corp.                   $17      Mining
    -------------------------------------------------------------------------
    Fralex Therapeutics Inc.                      $10      Bio/Pharma
    -------------------------------------------------------------------------
    Carlisle Goldfields Limited                    $4      Mining
    -------------------------------------------------------------------------
    Total                                        $191
    -------------------------------------------------------------------------



    Top 5 IPOs (M $ Canadian) - First Quarter 2006

    -------------------------------------------------------------------------
    Name                                       Value       Sector
    -------------------------------------------------------------------------
    Addax Petroleum Corporation                  $409      Oil & Gas
    -------------------------------------------------------------------------
    Jazz Air Income Fund                         $235      Transportation
    -------------------------------------------------------------------------
    Resolve  Business Outsourcing Income Fund    $225      Services
    -------------------------------------------------------------------------
    Crombie Real Estate Investment Trust         $205      Real Estate
    -------------------------------------------------------------------------
    Supremex Income Fund                         $175      Retail & Consumer
    -------------------------------------------------------------------------
    Total                                      $1,249
    -------------------------------------------------------------------------
    




For further information:

For further information: Susan MacDonald, MacDonald & Co., (416)
975-1572, susan.e.macdonald@bellnet.ca; Carolyn Forest, PricewaterhouseCoopers
LLP, (416) 814-5730, carolyn.forest@ca.pwc.com

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