Facts ‘n’ Figures: Canada’s IPO market struggles at fraction of 2018 pace, PwC says

Small green spodumene blades in pegmatites at New Age Metals’ Lithium Two lithium project. Credit: New Age Metals.Small green spodumene blades in pegmatites at New Age Metals’ Lithium Two lithium project. Credit: New Age Metals.

The following is a release by PwC Canada as part of its quarterly monitoring of the status of initial public offerings in Canada. Visit www.pwc.com/ca for more information.

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 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, our 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 Toronto Stock Exchange (TSX) totalling $948 million.

There were no new issues on the TSX in the second quarter of 2019. Ten IPOs made it to the Canadian Securities Exchange (CSE) and three to the TSX Venture Exchange 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 United States.

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, 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 PwC national IPO leader Dean Braunsteiner. Lacking the blockbuster tech issues like Slack and Lyft, the Canadian market doesn’t have the momentum of the U.S., he adds.

Noteworthy in the second quarter was the flurry of small issues on the CSE from the mining sector. But it is too early to confirm the long-awaited resurgence of mining securities.

“This was not indicative of a wave of expansion,” Braunsteiner says. “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 Canada has more than 7,400 partners and staff in offices across the country working the fields of assurance, tax, consulting and deals services. PwC Canada is a member of the PwC network of firms, with more than 250,000 people in 158 countries.

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