The impact of geo-political strife in the Middle East and North Africa and tripartite tragedy in Japan hindered the Canadian IPO market in the first quarter, according to the quarterly PwC survey of initial public offerings on Canadian equity exchanges.
However, the pause could mean new investment opportunities for those waiting on the sidelines hoping for the coast to soon be clear.
Regarded traditionally a sluggish period in the IPO calendar, initial public offers took a further breather as volatility and geo-political risks put equity markets on a rollercoaster ride in the opening months of the year, the survey noted.
Neil Manji, PwC national IPO Services leader assures this lack of IPO activity is a pause in the market’s recovery rather than something more dire.
“We had a very robust IPO market coming into the end of last year, and a number of new issues were pulled forward into 2010 to take advantage of the strong market,” said Manji. “Combined with what is a traditionally slower quarter for IPOs, the result was even lower activity for Q1.
The first quarter of 2011 generated less than $200 million from 13 issues of new equity on all Canadian exchanges, down from 16 new issues worth $464 million in the same period in 2010, and a stark contrasts to the last quarter of 2010 that saw $1.2 billion worth of new issues hit the market.
But with the U.S. economic recovery taking hold, market sentiment in Canada improving, and some IPOs already in the pipeline, the market should recover some of its momentum through 2011, he said.
The total Canadian IPO market accounted for $5.5 billion in new equity in 2010.
The largest IPO during the first quarter of 2011 was the $75 million issue from Bauer Performance Sports Ltd. on the TSX. Ten IPOs on the TSX Venture exchange with a value of more than $87 million in the first quarter was down from the 11 IPOs worth $21 million on that exchange in the same period of 2010.