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Summer 2018 Edition No11Vol1
Thursday July 5, 2018

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Slow & Steady

First half IPO market is "slow and steady": PwC Canada survey

The market for initial public offerings in Canada crested the halfway point of 2018 with just more than $1 billion of new equity raised — a market characterized as "slow and steady."

That's the view of the quarterly PwC Canada survey of the Canadian IPO market, published early this week.

Eleven new issues on all exchanges resulted in $956 million raised in the second quarter, including four issues on the TSX totalling $948 million representing the lion's share of the proceeds. The largest IPO of the quarter, $462 million, was the dual listing of Ceridian HCM Holdings Inc. on the New York Stock Exchange and the TSX.

That took the half-year tally on all exchanges to 20 issues with a value of $1.1 billion for the period. In the same period of 2017, 16 issues generated $2.9 billion.

"It was a slow and steady quarter fairly typical of a traditional IPO market," explains Dean Braunsteiner, PwC Canada national IPO leader. "Comparing it with last year is a little unfair given that the huge Kinder Morgan issue arrived in the same period of 2017."

Notable in the quarter were the presence of issues from the real estate and recreational cannabis industries, Braunsteiner says, along with the arrival of a gold miner making its debut on the TSX. Successful issues from junior miners also appeared on the CSE and Venture exchanges.

A general uncertainty in the market makes predicting the rest of 2018 a challenge, Braunsteiner admits. "From what's in the pipeline, it looks like a very traditional Canadian IPO market, with good, mid-sized companies in the $75 million to $150 million range," Braunsteiner explains. "But many companies today are on a dual track: they start down the road toward IPO but keep the door open to a private purchase or funding option. With a great deal of uncertainty surrounding NAFTA and trade in general, they want the flexibility of another option." The consolidation of firms in the recreational cannabis sector is symptomatic of the situation, where companies that appear headed for a public flotation get acquired by competitors before they reach the starting gate.

Nine new issues on the CSE generated $10 million in funding in the first half of 2018 while the Venture had five new issues worth $4 million in the period.

PwC Canada has conducted its survey 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 survey, investment vehicles such as structured products are not included in overall survey 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 survey.




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