The market for initial public offerings fell quiet in the third quarter, but the background noise of new issues waiting for the right opportunity to reach Canadian equity markets suggests that activity in the balance of the year could yet redeem a lackluster 2012, a quarterly survey of IPO activity in Canada by PWC suggests.
Just seven new issues with a total value of $271 million were recorded in all Canadian exchanges in the third quarter of 2012, the PwC survey showed. There was a single IPO on the TSX during the period with a value of $212 million.
There were 20 new issues on all exchanges during the same period of 2011 with a total value of $537 million, including four IPOs on the TSX worth $457 million.
In the first three quarters of this year, 39 IPOs were registered on all Canadian exchanges with a total value of $441 million, including three new issues of equity valued at $397 million on the TSX, according to the survey. Those figures are down from the first three quarters of 2011, when all Canadian exchanges registered 54 new equity issues with a value of $1.9 billion (14 IPOs on the TSX for $1.7 billion).
Gibson Energy Inc. (TSX: T.GEI, Stock Forum), for example, raised $500 million in June 2011 from an IPO of 31.2 million common shares priced at $16 a share. The stock traded this week at $22.90
Midas Gold Corp. (TSX: T.MAX, Stock Forum) completed a $40 million IPO in July, 2011 that was comprised of 12.3 million common shares, priced at $3.25. The stock traded this week at $3.21.
Longview Oil Corp. (TSX: T.LNV, Stock Forum) raised $150 million from an IPO in April, 2011 comprised of 15 million shares, priced at $10. The stock traded this week at $7.04.
The slow pace of new issues could all change in the fourth quarter if a few of the current market roadblocks are cleared, according to Dean Braunsteiner, PwC national IPO services leader.
“There are some very significant IPOs in the pipeline that could revive the total IPO market and turn around the year, but it will require the resolution of some thorny issues beyond our borders,’’ says Braunsteiner.
Persistent concerns over the debt crisis and current question marks about Spain continue to cast a long shadow in the market, Braunsteiner says, while the slow pace of recovery in the U.S. weighs heavily on many investors.
Although a slide in commodity prices earlier in the quarter has been reversed, that temporarily put the brakes on activity in the mining sector – a sector that has traditionally been a driver of Canadian IPO activity.