The market for initial public offerings (IPOs) in Canada last year was the weakest since 2001 due to market volatility, uncertainty in the credit markets and no income trust offerings, according to a survey by PricewaterhouseCoopers.
In all, 90 IPOs made it to the TSX and TSX Venture exchanges for a combined value of $3.4 billion. By comparison, 109 new issues worth $5.6 billion were issued on those markets in 2006.
The $1.1 billion fourth quarter IPO by Franco-Nevada on the TSX saved the 2007 results from resembling 2001. Without that offering, the value of IPOs on the TSX and TSX Venture exchanges would have been $2.3 billion, just slightly higher than $2.1 billion in 2001.
“The impact of the loss of income trusts in the market was felt most of the year, as potential issuers tried to chart a course for the future,” says Ross Sinclair, national leader of PwC’s IPO and income trust services. “At the same time, there were wild swings in the market—volatility over weeks and months that makes pricing a new issue almost impossible. And finally, the uncertainty in the credit markets left many participants distracted and alarmed.”
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