Canadian IPO markets forecasted to be stronger this year
TORONTO, July 9, 2012 /CNW/ - In spite of tepid growth and prevailing
global economic turbulence, IPO markets showed remarkable resilience in
2011. And in Canada there's a robust pipeline of companies ready to
list, says Ernst & Young in a recent report.
In fact, Canadian companies and sectors continued to post impressive
results in 2011, and the number of IPOs is expected to increase in
"Overall, the number of issuers has gone up by 4% in the last year,
which is quite encouraging," says Bill Demers, Partner and Canadian IPO
Leader. "The windows for completing a deal successfully are likely to
open and close quickly as the IPO market functions very much in cycles.
And right now, there are a lot of companies ready to go public. They're
just waiting for the right window to open."
As the markets evolve in the second half of 2012, companies considering
an IPO this year should factor in the following current trends, which
have been outlined in the ninth annual Ernst & Young Global IPO trends report.
Learning to live with volatility. Despite the steady outlook for the Canadian economy, the ongoing
sovereign debt crisis, global political instability, sluggish growth
prospects and the unpredictable nature of the market will all have a
cautionary influence on Canadian IPO decisions for at least the next 12
Managing execution risk. Valuation and pricing conditions continue to change quickly, and a
record number of companies have had to withdraw their listing plans.
The increased execution risk changes the way companies need to plan for
Preparing early, moving fast. IPO companies need to ensure they have a clear, compelling story to tell
investors about their financials, so the key is to prepare early,
manage risk that might slow down a listing, and prepare to move quick
once a viable market window opens.
Executives are keeping an open mind. Many companies are taking their IPO to foreign markets, rather than
listing on their national market by default. Also, companies are
seeking new forms of equity financing, such as crowd-funding portals to
broaden their funding options.
Central bankers are the key holders. Sovereign debt weighed heavily on global IPO markets last year, but as
2012 moves forward, the outlook is bright. However, the key to
sustained IPO recovery will largely remain in the hands of the world's
central bankers and sovereign leaders.
Companies are proving profitable. It's worth noting that many companies have had strong corporate
earnings growth, with growth rates forecasted to rise in the second
half of 2012. Profitable, capital-hungry companies and a positive
equity market sentiment are two key ingredients for a vibrant IPO
Learning from blockbuster IPOs. One deal does not make a trend, but IPO companies in all sectors can
learn a lot from studying recent new-listing experiences — how they
priced their company, how they funded the company and how they managed
IPOs are boosting from private equity. In the US, nine of the year's 10 biggest IPOs involved
private-equity-backed companies. Private equity firms have become more
nimble: when market windows opened, they were ready to move quickly. In
Canada, there is an estimated $40 billion worth of capital raised.
There has also been a rise in venture-capital-backed IPOs globally in
2011. We expect this to continue in 2012.
About the report
The ninth annual Ernst & Young Global IPO trends report highlights the outlook for IPO markets and analyzes the key
trends of 2011. It includes the perspectives of some of the world's top
investment bankers, whom we'd like to thank for their time and support.
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