Perfect storm of factors pushes IPO market toward rocky shores



    TORONTO, July 3 /CNW/ - Battered by a perfect storm of negative
influences, the market for new public offerings on Canadian equity markets
fell to another record low in the second quarter of 2008, the latest
PricewaterhouseCoopers (PwC) survey of Canadian equity markets has shown.
    Eighteen new issues on all Canadian exchanges in the period April 1-June
30, 2008, gathered just $466 million in new equity, down from 20 IPOs worth
$555 million in the same period of 2007, the survey revealed. The second
quarter of 2008 saw just seven new issues on the TSX for a value of $434
million, compared to eight IPOs worth $453 million in the same quarter of
2007.
    "To put these results in context, the 2007 results were already among the
lowest on record," explains Ross Sinclair, national leader of PwC's IPO and
income trust services.
    There were a total of 38 new issues on all exchanges in the first half of
2008, down from 41 in the same period of 2007. A total value of $614 million
in the first half of this year was off almost one-third from the $855 million
in the first half of 2007. The TSX saw 10 new issues in the first half of this
year for a value of $547 million, down from 13 IPOs valued at $644 million
during the same period last year.
    At its current pace, the market will struggle to reach half the value of
the slowest period of the decade, Sinclair says, when just 46 new issues worth
$2.07 billion reached the market in 2001. 2005 was the best year for IPOs,
when 119 new issues worth more than $6.9 billion came to market.
    "The IPO market in Canada is in the centre of a perfect storm of negative
factors that are pushing the market into record low territory," says Sinclair.
"The extreme volatility of the market, with large swings and relatively low
valuations for any company that is not in commodities or oil and gas, is just
one factor. A slowdown in the US economy, continued uncertainty in credit
markets, concern in the financial services sector, the disappearance of income
trusts and the impact of higher oil prices have all contributed to an
environment where it is hard to see any optimism.
    "To complete an offering in this market, you need a really compelling
story - a quality company, a strong track record, flare and growth," Sinclair
adds. "The only company that brought that combination to the market in the
second quarter was Sprott Inc." Sprott completed the largest IPO on the TSX
during the quarter, a $200 million issue in April, 2008, which represented
close to one-half of the total market for the second quarter.
    While the second quarter of 2008 was an improvement from the first
quarter, Sinclair sees no significant upward trend that would lift the IPO
market before this fall. "Even the TSX Venture exchange, which can sometimes
show some interesting trends, has little good news," he says. Just nine IPOs
with a value of $30 million made it to the junior exchange in the second
quarter, less than a third of the $99 million that was placed on the TSX
Venture in the same period of 2007.
    For more information, please visit www.pwc.com/ca/iposurveys

    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
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(www.pwc.com/ca) and its related entities have more than 5,200 partners and
staff in offices across the country.
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                   Survey of Canadian IPO Capital Markets
                           January 2008 - June 2008

             Number and Gross Value of IPOs on Canadian Exchanges

    -------------------------------------------------------------------------
                     Number     Value (M $CDN)     Number     Value (M $CDN)
    Exchange      Jan-Jun 2008   Jan-Jun 2008   Jan-Jun 2007   Jan-Jun 2007
    -------------------------------------------------------------------------
    TSX                10            547             13            644
    -------------------------------------------------------------------------
    TSX Venture        23             61             24            190
    -------------------------------------------------------------------------
    Other (CNQ, AIM)    5              6              4             21
    -------------------------------------------------------------------------
    Total              38            614             41            855
    -------------------------------------------------------------------------

    Number and Gross Value of IPOs on Canadian Exchanges (2ndh quarter only)

    -------------------------------------------------------------------------
                     Number     Value (M $CDN)     Number     Value (M $CDN)
    Exchange      Apr-Jun 2008   Apr-Jun 2008   Apr-Jun 2007   Apr-Jun 2007
    -------------------------------------------------------------------------
    TSX                 7            434              8            453
    -------------------------------------------------------------------------
    TSX Venture         9             30             10             99
    -------------------------------------------------------------------------
    Other (CNQ, AIM)    2              2              2              3
    -------------------------------------------------------------------------
    Total              18            466             20            555
    -------------------------------------------------------------------------

       Top 5 Corporation IPOs January - June 2008 (M $ Canadian - TSX)

    -------------------------------------------------------------------------
    Name                             Value                 Sector
    -------------------------------------------------------------------------
    Sprott                            200       Financial Services
    -------------------------------------------------------------------------
    Seacliff Construction Corp.       100       Construction
    -------------------------------------------------------------------------
    Orbit Garant Drilling Inc.         60       Mining
    -------------------------------------------------------------------------
    Pristine Power Inc.                50       Energy & Utilities
    -------------------------------------------------------------------------
    Davie Yards Inc.                   42       Transportation & Environment
    -------------------------------------------------------------------------
    Total                             452
    -------------------------------------------------------------------------

      Top 5 Corporation IPOs January - June 2008 (M $ Canadian - TSX-V)

    -------------------------------------------------------------------------
    Name                             Value                 Sector
    -------------------------------------------------------------------------
    Western Potash Corp.               20                  Mining
    -------------------------------------------------------------------------
    Magellan Minerals Ltd.              9                  Mining
    -------------------------------------------------------------------------
    Rio Cristal Zinc Corporation        6                  Mining
    -------------------------------------------------------------------------
    Oroco Resource Corp.                4                  Mining
    -------------------------------------------------------------------------
    Source Exploration Corp.            3                  Mining
    -------------------------------------------------------------------------
    Total                              42
    -------------------------------------------------------------------------

            Number and Gross Values of IPOs on Canadian Exchanges
                            Historical Comparison

    -------------------------------------------------------------------------
                     Number   Value (M $CDN)       Number   Value (M $CDN)
    Year            Jan-Jun       Jan-Jun        Full Year     Full Year
    -------------------------------------------------------------------------
    2001               32          1,525             46          2,074
    -------------------------------------------------------------------------
    2002               30          2,273             69          5,797
    -------------------------------------------------------------------------
    2003               22          1,483             56          4,581
    -------------------------------------------------------------------------
    2004               32          2,630             87          6,164
    -------------------------------------------------------------------------
    2005               34          2,590            119          6,977
    -------------------------------------------------------------------------
    2006               61          4,083            116          5,800
    -------------------------------------------------------------------------
    2007               41            855            100          3,451
    -------------------------------------------------------------------------
    2008               38            614
    -------------------------------------------------------------------------
    





For further information:

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

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