The overall 20% increase in equity financings in 2009's first quarter was helped by Canada's largest financial institutions looking to boost their capital reserves, according to an Investment Industry Association of Canada report.
Total financings rose to $13.7 billion in the first quarter ending March 31, an 8% increase from the fourth quarter's $12.7 billion and 20% above the $10.8 billion raised in 2008's first quarter.
The growth in public offerings came from a shift in preferred share financings by Canada's financial institutions. Some of the largest financings in the first quarter included Toronto Dominion Bank's $950 million preferred share offering, Royal Bank's $900 million preferred offering and Scotiabank's $600 million offering. They accounted for 58% of the first quarter's $4.2 billion in preferred offerings.
The number of common share offerings remained at the same pace as in 2008's fourth quarter.
Canada's IPO market still appears to be in a drought. There were only $271 million worth of initial public offerings in the quarter. Secondary offerings fell 27% and private placements dropped 30%. Small business financing, characterized by underwritings valued at under $10 million, also plunged 46% from fourth-quarter results.
The IIAC sees much uncertain ahead. Investors are riding on the hopes that the equity markets have bottomed out and a recovery is underway. Issuers with limited access to the credit markets are hoping that the equity markets can start to meet their financing needs.