The Canadian market for initial public offerings (IPOs) nearly ground to a halt in 2011’s fourth quarter, according to a report released this morning by PwC.
The market struggled to peak at $2 billion, the report found – the third lowest total for any year since 2001.
The survey showed a single $25 million issue on the Toronto Stock Exchange in the fourth quarter, and a reduction in activity on the TSX Venture Exchange generated just $52 million from 10 new issues on all Canadian exchanges in the final three months of 2011.
PwC found that, for all of 2011, the 61 new issues on all Canadian exchanges generated $2 billion, compared with the previous year’s 73 IPOs, which generated more than $5.5 billion.
Dean Braunsteiner, PwC national IPO services leader, said the European debt crisis was a key reason for the slowdown in Canadian IPO activity in late 2011.
“In Canada, which is heavily dependent on issues from the mining and energy sectors, [the debt crisis] caused a lot of market volatility, so it was very difficult to price any new issues, and companies looking to go public – they really didn’t see the values that they were expecting to get,” he said.
Also hitting the IPO market were fears of global recession and an ensuing slowdown in production and the need for commodities.
Braunsteiner said he expects Canadian IPO activity in 2012 to match 2011 levels, but he cautioned that the year looks set to start off slow.
“I think there’s going to be a slow start just given the uncertainty, again needing to get the European crisis sorted out, but I think we’ll have enough time to recover to at least match what we would have seen last year.”
Jenny Wagler
@JennyWagler_BIV