TORONTO, April 6 /CNW/ - Four initial public offerings of new equity on the TSX in the first quarter of 2010 equalled the total number of IPOs on Canada's senior exchange in all of 2009, the PricewaterhouseCoopers (PwC) quarterly survey of IPO activity on Canadian exchanges has shown. The first quarter activity, coupled with the announced IPO of Athabasca Oil Sands Corp. scheduled for early April, sets the stage for a concerted recovery of the IPO market in Canada this year.
The four new issues on the TSX in the first quarter generated $442.7 million and accounted for the vast majority of the total $464.6 million raised on all Canadian exchanges during the period. There were 12 IPOs on the TSX-Venture and other exchanges worth $21.9 million, the survey showed. In the same period of 2009, just $2.4 million was raised through three IPOs on the TSX Venture exchange. There were no IPOs on the TSX in the first quarter of 2009.
The early April $1.35 billion IPO by Athabasca Oil Sands will push proceeds from new issues to approximately $1.8 billion, matching the amount of IPO dollars raised for the entire of 2009 on all of Canada's senior exchanges.
The activity for the first 100 days signals a significant reversal from the drought-like conditions of the past two years, according to Neil Manji, PwC National IPO services leader.
"There have been 16 IPOs so far this year vs. three for the first quarter of 2009," Manji says.
"What we're seeing is continued confidence for new equity offerings that began late last year. The past three months showed us the investor appetite for quality issues from the Energy, Mining, Real Estate and Services sectors. The larger story, however, is the activity we see coming in the weeks and months ahead. A number of companies that might have considered an IPO in the last two years were forced to defer those plans as a result of the credit crisis. These companies are now reviving those plans. What we're seeing in the pipeline suggests issuers are reading the signs that the IPO market is open again."
"At the beginning of the year, we suggested that an IPO market of $4 billion in Canada was not out of the question. Within the first 100 days of 2010, the IPO market will have reached nearly half of that activity," Manji adds.
In the same way that a number of factors converged to drive the Canadian IPO market to new lows in 2008, positive factors such as better valuations and improved liquidity have combined to help improve investor appetite, Manji says, while market stability has made planning an IPO less risky. "This has every indication of being the start of something good," he concludes.
The Canadian IPO market has seen dramatic changes in direction twice in the past decade, Manji points out. The high of 2002-2003 immediately followed the low of the "dot.com" crash of 2001, while the high point of the decade (2005-2006) followed the low of 2003. "If history is any indication, 2010 could show a significant rebound from the low point at the end of the decade," Manji notes.
The largest IPO in the Canadian market in the first quarter of 2010 was the $190 million issue on the TSX by Leisureworld Senior Care Corporation. The $8 million IPO of Makuba Resources Limited was the largest new issue on the TSX Venture exchange during the quarter.
PricewaterhouseCoopers 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
To download the PwC publication The Canadian IPO Market - Decade in Review 2000-2009 visit www.pwc.com/ca/decadeinreview
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