The blooming pot sector, a surge in Canada’s newest exchange, and cross-border listings were just some tailwinds
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Canadian markets saw $792 million worth of new equity from 12 issues in the third quarter, according to a new survey from PwC.
The TSX reportedly saw three IPOs that together were worth $451 million. Nine new issues in Canada accounted for $433 million in the same period of 2017.
The pot sector was on showcase during the quarter thanks to a $100-million offering of Charlotte’s Web Holdings on the CSE, $4 million on the Canadian Securities Exchange (CSE) for RMMI Corp, and a cross-border listing by Tilray. There was also a reverse takeover of AIM2 Ventures capital pool on the TSX Venture Exchange by Canopy Rivers, though PwC doesn’t include such transactions in its quarterly survey of IPOs.
“The regulatory environment cannabis firms have to navigate to get directly to public markets is pretty rigorous, with pretty detailed scrutiny of licensing and business plans in any conventional IPO,” noted Dean Braunsteiner, national IPO leader at PwC in Canada. “Companies with exposure to the US market see a clearer track through the CSE.”
The CSE has gained investors’ and issuers’ attention with a surge of activity, including five new issues in Q3 — four coming from the mining and real-estate sectors — and 14 so far in 2018.
The third quarter was also marked by two Canadian-domiciled companies debuting on the US-based NASDAQ exchange. In addition to Tilray’s $202 million IPO, the quarter’s second-largest issue, was the listing of Electrameccanica Vehicles Corp. “For some companies, a U.S. listing is an efficient way to attract US investors,” Braunsteiner said.
The largest issue of the quarter was MAV Beauty Brands’ $241-million IPO on the TSX, which made it the third premium consumer-product company after Canada Goose and Roots to join the market recently. Another considerable event on the exchange was the IPO of Minto Apartment Real Estate Investment Trust, the third major issue of the year from a REIT, which amounted to $200 million.
“It's a welcome return for a sector that has been very quiet recently," said Braunsteiner. "I would expect to see more REIT issues in the future."
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