TORONTO, Jan. 5, 2015 /CNW/ - Despite a dismal first quarter and a volatile final quarter, the market for Initial Public Offerings in Canada topped $3.5 billion in 2014, the annual PwC survey of Canadian equity markets reveals.
Markets absorbed just two new issues in the final quarter of 2014, delivering more than $810 million in new equity during the period including one issue on the TSX worth almost all of the $810 million, the PwC survey revealed. In comparison, the final quarter of last year placed $582 million in six IPOs, four of which generated $577 million on the TSX.
The $3.5 billion total for the year is the result of 14 IPOs on all exchanges, including eight issues on the TSX with a value of $3.4 billion. In 2013, 30 issues generated $2.7 billion – almost all of which came from the 18 IPOs placed through the TSX.
Dean Braunsteiner, PwC national IPO leader, characterized 2014 as turbulent. "When you consider the turbulent market year we've been through, 2014 is remarkable for the number of large, high-quality issues we've seen," he says.
"The first quarter was missing in action – the worst quarterly result in five years with no mining or TSX activity. Then we had two quarters of solid activity, where the oil and gas sector took over from real estate as the new market driver. And, of course, the collapse of the price of oil and the resultant market gyrations made the closing days of final quarter extremely difficult," says Braunsteiner. "Given all of that, the IPO market 2014 did better than might be expected."
With mining in the doldrums, real estate recovering and the oil and gas sector still reeling, Braunsteiner is reluctant to predict anything for the IPO market in 2015 but does point to lessons from 2014 for companies considering an offering.
"Timing and preparation have never been more critical," Braunsteiner advises. "We have seen that investors welcome well-priced issues from good companies with a track record of reliable earnings. We don't see that changing. In a market that is uneven, companies considering going public need to be prepared to move quickly in these periods of market stability like we saw in 2014."
The $1.4 billion PrairieSky Royalty Ltd. IPO on the TSX in the second quarter of 2014 was the largest new issue of the year by far. There were five new issues on the TSX in the oil and gas column in 2014 representing 85 per cent of the total Canadian IPO market, according to the survey. Other sectors with issues included financial services, technology, manufacturing, energy, industrial products and health care services – each with one IPO. The mining sector accounted for three issues (two on the TSX Venture, one on the CSE).
Just five new issues made it to the TSX Venture exchange in 2014. Proceeds totaled $15 million.
The Seven Generations Energy Ltd. IPO from the oil and gas sector, valued at $810 million, was the largest new issue of the final quarter.
PwC 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.
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SOURCE PwC (PricewaterhouseCoopers)