Slow third quarter recovery of IPO market driven by better fundamentals, PwC
survey suggests

TORONTO, Oct. 5 /CNW/ - A slow recovery in the market for initial public offerings on Canada's senior equity exchange in the third quarter has pushed the total new equity raised in Canadian public markets in the first nine months of 2009 to almost $1.5 billion. The activity in the quarter is a far cry from the heated IPO activity of a few years ago but a significant improvement from the record lows of the past year, the PricewaterhouseCoopers LLP (PwC) survey of IPO markets in Canada has revealed.

Two new issues on the TSX in the third quarter with a total value of $950 million compares to no IPO activity on the senior exchange in the same period of 2008 when the TSX was in the midst of a drought in IPOs that lasted for three consecutive quarters. A total of five IPOs were reported on all of Canada's equity markets in the third quarter of 2009 for a total value of $952 million, the quarterly PwC survey showed.

The same 'perfect storm' of factors that conspired to stall the IPO market in 2008 seems to have started to reverse course and may now be helping to slowly rebuild the IPO market fundamentals, says Ross Sinclair, national leader of PwC's Income Trust and IPO Services.

"The key ingredients that have been missing in the market - improved liquidity, better pricing and credit spreads, rising valuations and investors regaining confidence - are all contributing to a more positive environment," says Sinclair. "The $850 million Genworth MI Canada Inc. issue in July may have been the largest issue in the quarter, but its real significance is the confidence it shows in a market that was looking for a turning point."

Sinclair views the growing activity in equity offerings and debt issues, along with a number of IPOs in development, as welcome indicators of a gradual improvement in the health of the IPO market. "We are seeing many varied debt and equity offerings being absorbed quickly and a steady market for other offerings such as preferred shares. Interestingly, some of the private equity deals of the past are starting to mature to the point where those investors are more comfortable designing their exit strategies to include the IPO alternative."

The 15 new issues on all exchanges in first three quarters of 2009 represented a drop in the total number of IPOs but an improvement in gross value from the results of the same period of 2008, the survey showed. For the first nine months of 2008, a total of 53 new issues were launched on all of Canada's exchanges for a total value of $680 million. By comparison, 63 IPOs were introduced in the same period of 2007, with proceeds totalling $1.2 billion.

The biggest reduction in activity came on the TSX Venture exchange, where just two new issues were registered in the third quarter of 2009 versus 14 in the same period of 2008.

PwC conducts a quarterly survey of IPO activity on Canada's equity markets. The PwC survey does not include structured financial product listings in its quarterly reviews because they do not represent new equity raised for operating companies.

About PricewaterhouseCoopers LLP

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 155,000 people in 153 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice. In Canada, PricewaterhouseCoopers LLP (www.pwc.com/ca) and its related entities have more than 5,200 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 2009 - September 2009

    Third Quarter Results

    -------------------------------------------------------------------------
    Quarter         TSX            TSX-V           Other        Total Market
    -------------------------------------------------------------------------
    Sept. 09        (2)             (2)             (1)              (5)
              $950.1 million    $1.6 million    $.5 million    $952.2 million
    -------------------------------------------------------------------------
    Sept. 08                       (14)             (1)             (15)
                               $66.3 million    $.4 million     $66.7 million
    -------------------------------------------------------------------------



    Nine Month Results

    -------------------------------------------------------------------------
    Year            TSX            TSX-V           Other        Total Market
    -------------------------------------------------------------------------
    2009            (3)             (8)             (4)             (15)
            $1,450.3 million   $17.4 million   $1.7 million  $1,469.4 million
    -------------------------------------------------------------------------
    2008           (10)            (37)             (6)             (53)
              $546.6 million  $127.4 million   $6.3 million    $680.3 million
    -------------------------------------------------------------------------



    Full year comparison

    -------------------------------------------------------------------------
    Year            TSX            TSX-V           Other        Total Market
    -------------------------------------------------------------------------
    2008           (10)            (38)             (9)             (57)
               $.547 billion   $.128 billion  $.007 billion     $.682 billion
    -------------------------------------------------------------------------
    2007           (36)            (54)            (10)            (100)
              $3.043 billion   $.382 billion  $.026 billion    $3.451 billion
    -------------------------------------------------------------------------



    Structured Products Comparison

    -------------------------------------------------------------------------
    Year   Quarter
               First         Second          Third         Fourth      Total
    -------------------------------------------------------------------------
    2009        (8)           (14)            (9)                       (31)
           $.395 billion $1.143 billion  $.200 billion                 $1.738
                                                                      billion
    -------------------------------------------------------------------------
    2008       (25)            (7)            (6)            (12)       (50)
          $1.182 billion  $.368 billion  $.151 billion  $.292 billion  $1.993
                                                                      billion
    -------------------------------------------------------------------------
    2007       (28)           (16)           (17)            (19)       (80)
          $1.872 billion  $.948 billion $1.011 billion  $.519 billion  $4.350
                                                                      billion
    -------------------------------------------------------------------------
    

SOURCE PwC

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

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