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First half IPO market is ‘slow and steady’, says PwC Canada survey


The market for initial public offerings in Canada crested the halfway point of 2018 with just more than CAD1 billion of new equity raised - a market characterised as ‘slow and steady’, according to the latest quarterly PwC Canada survey of the Canadian IPO market, published today.

Eleven new issues on all exchanges resulted in CAD956 million raised in the second quarter, including four issues on the TSX totalling CAD948 million representing the lion's share of the proceeds. The largest IPO of the quarter, CAD462 million, was the dual listing of Ceridian HCM Holdings Inc. on the New York Stock Exchange and the TSX.
 
That took the half-year tally on all exchanges to 20 issues with a value of CAD1.1 billion for the period. In the same period of 2017, 16 issues generated CAD2.9 billion.
 
"It was a slow and steady quarter fairly typical of a traditional IPO market," says Dean Braunsteiner, PwC Canada national IPO leader. "Comparing it with last year is a little unfair given that the huge Kinder Morgan issue arrived in the same period of 2017."
 
“Notable in the quarter were the presence of issues from the real estate and recreational cannabis industries”, Braunsteiner says, “along with the arrival of a gold miner making its debut on the TSX. Successful issues from junior miners also appeared on the CSE and Venture exchanges.”
 
A general uncertainty in the market makes predicting the rest of 2018 a challenge, Braunsteiner admits.
 
"From what's in the pipeline, it looks like a very traditional Canadian IPO market, with good, mid-sized companies in the CAD75 million to CAD150 million range," Braunsteiner says. "But many companies today are on a dual track: they start down the road toward IPO but keep the door open to a private purchase or funding option. With a great deal of uncertainty surrounding NAFTA and trade in general, they want the flexibility of another option."
 
The consolidation of firms in the recreational cannabis sector is symptomatic of the situation, where companies that appear headed for a public flotation get acquired by competitors before they reach the starting gate.
 
Nine new issues on the CSE generated CAD10 million in funding in the first half of 2018 while the Venture had five new issues worth CAD4 million in the period.

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