Canadian IPOs have lagged 2018 levels so far this year says PwC

Total amount raised was far below year-ago levels says report

Canadian IPOs have lagged 2018 levels so far this year says PwC
Steve Randall

Canadian exchanges saw more new issues in the second quarter of 2019 compared to a year ago but they raised significantly less.

PwC reports that there were 13 IPOs in the first half of this year raising $13 million but this lags the first half of 2018 where 11 new issues raised $956 million including 4 on the TSX which raised $948 million.

The TSX saw no IPOs in the second quarter but there were 10 on the CSE and 3 on the TSX-Venture.

Meanwhile, Milestone Pharmaceuticals’ IPO was the largest issue of the second quarter, raising $111 million, but the Montreal firm listed on the NASDAQ, following a trend among Canadian firms to list on US exchanges.

The weaker showing for the second quarter follows that in the first quarter. The first six months of 2019 saw 21 21 IPOs on all Canadian exchanges raising slightly above $340 million.

In contrast, there were 20 issues in the first half of 2019 but they raised $1.1 billion. Even including the Milestone issue on NASDAQ, just $451 million was raised for Canadian companies in the first half.

Trade concerns
Canadian exchanges have suffered partly from concern over trade, including Canada-China and the replacement for the NAFTA deal.

"Those concerns, and a gloomy narrative about a potential economic downturn that dominated the conversation earlier in the year, left the outlook clouded," said Dean Braunsteiner, PwC national IPO leader. “Lacking the blockbuster tech issues like Slack and Lyft, the Canadian market doesn't have the momentum of the US.”

Even the small spark of activity on the CSE from the mining sector comes with a cautious note, especially for those hoping for a rebound for mining securities.

"This was not indicative of a wave of expansion," Braunsteiner explains. "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."