TORONTO, July 2, 2019 /CNW/ - The surge in small mining issues and a single cross-border listing from the pharmaceutical sector was not enough to redeem the second quarter market for initial public offerings (IPOs) in Canada, the quarterly PwC Canada review of the nation's IPO market showed.
Thirteen new issues on all Canadian exchanges delivered just over $13 million in proceeds in the second quarter of 2019, the PwC summary revealed. This compares to 11 new issues on all exchanges that resulted in $956 million raised in the second quarter of 2018, including four issues on the TSX totaling $948 million.
There were no new issues on the TSX in the second quarter of 2019. Ten IPOs made it to the CSE and three to the TSX-Venture during the quarter.
The largest issue of the second quarter was the $111 million IPO of Montreal's Milestone Pharmaceuticals Inc. on the NASDAQ, a continuation of the trend for Canadian companies to list in the U.S.
Total proceeds from 21 IPOs on all Canadian exchanges in the first half of 2019 squeaked past $340 million, less than a third of the $1.1 billion gained from 20 issues in the same period of 2018. Even including the Milestone issue on NASDAQ, just $451 million was raised for Canadian companies in the first half.
The Canadian IPO market is out of step with the booming U.S. market for new issues, notes Dean Braunsteiner, PwC national IPO leader, in part because of looming questions over Canadian trade with China and lingering concerns over the ratification of the pact to replace NAFTA. "Those concerns, and a gloomy narrative about a potential economic downturn that dominated the conversation earlier in the year, left the outlook clouded," says Braunsteiner. Lacking the blockbuster tech issues like Slack and Lyft, the Canadian market doesn't have the momentum of the U.S., he notes.
Noteworthy in the second quarter was the flurry of small issues on the CSE from the mining sector, Braunsteiner observes. But it is too early to confirm the long-awaited resurgence of mining securities, he warns. "This was not indicative of a wave of expansion," Braunsteiner explains. "A lot of very small issues just helped these juniors keep the lights on. But it may also be the opportunity for some consolidation among the smaller players in the sector, similar to what's going on with the major players."
PwC has conducted its review of the IPO market in Canada for more than 15 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 report, investment vehicles such as structured products are not included in overall results because they do not represent new equity raised for operating companies. New issues from companies that are created from the reverse takeover of an existing public company are also not included in the summary.
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SOURCE PwC (PricewaterhouseCoopers)